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7 Hospitals Settle in Whistleblower Lawsuit Alleging Medicare Fraud

The Justice Department Announcement announced today that seven hospitals in Florida, Texas, Mississippi, South Carolina, North Carolina and Alabama will be paying the federal government over $6.3 million in settlements involving allegations that the facilities submitted false claims to Medicare for kyphoplasty, a procedure used to treat spinal fractures typically caused by osteoporosis.

The settlements are part of a case was originally brought as a whistleblower lawsuit by former employees of Kyphon Inc. back in 2008. Under the federal False Claims Act, federal government employees who bring qui tam lawsuits are able to receive 15% to 25% of the amount recovered by the government in the case.

Between 2000 and 2008, the facilities allegedly overcharged Medicare for kyphoplasty by performing it on an in-patient basis in order to increase bills submitted to Medicare. Apparently the procedure can be safely performed on an out-patient basis, which is much cheaper.

The new settlements are part of a continuing effort to deal with the issue of overbilling Medicare for kyphoplasty. In May and September of 2009, as well as May of 2010, the Attorney General's office secured settlements with 18 other hospitals, and in May of 2008 there was a settlement with Medtronic Spine LLC, which paid $75 million following allegation that the company advised hospital providers to perform the procedure on an in-patient basis.

According to the U.S. Attorney's Office, accurate and honest billing for health services is important to maintain the integrity of the Medicare program. Pursuing the kyphoplasty cases is part of the Attorney General's effort to protect taxpayers and to ensure that Medicare beneficiaries are treated on the basis of what is actually the best course of medical care rather than on what will make the hospital the most money.

The recent settlements boosts the government's total recoveries from the qui tam lawsuit to $101 million, collected from 25 different hospitals.

Source: Wall Street Journal, "Hospitals To Pay $6.3 Mln In Latest DOJ Kyphoplasty Settlement," Matt Jarzemsky; 4 Jan 2011.

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