Johns Hopkins Bayview Medical Center Settles False Claims Act Case

June 30, 2009

Baltimore, Maryland - Johns Hopkins Bayview Medical Center, Inc. has agreed to pay the United States $2.75 million to settle claims that it submitted false claims to federal health benefits programs over a twenty month period between July 1, 2005 and February 28, 2007, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

According to the settlement agreement, during a period from July 1, 2005 to February 28, 2007, Johns Hopkins Bayview Medical Center submitted fraudulent claims to federal health benefits programs that were reimbursed based upon rates inflated through the submission of false statements by Bayview to the Maryland Health Services Cost Review Commission (HSCRC) about Bayview’s case mix severity. The HSCRC is responsible for setting rates for acute inpatient care in Maryland that are used by all insurance companies, including federal health benefit plans. The claims submitted to the HSCRC by Bayview included false statements that certain conditions existed that were not actually diagnosed or treated during patients’ admissions, including claims that patients suffered from malnutrition and acute respiratory failure when those conditions had not actually been diagnosed or treated during the patients’ hospital stay.

United States Attorney Rod J. Rosenstein said, “The hospital rate setting system in Maryland is integral to the containment of costs for federal health benefit programs and this investigation shows that abuses of this system will be prosecuted vigorously. This settlement also demonstrates the importance of statutes like the False Claims Act to the government’s efforts to root out fraud and abuse in government programs, by encouraging individuals to come forward with evidence of fraud that would never come to light otherwise.”

Specifically, according to the complaint filed in a sealed lawsuit under the False Claims Act by two individuals who worked in the Bayview coding department, Bayview employees were assigned to work in the coding department at Bayview during the relevant time period to assist in clinical documentation. Those employees reviewed charts relating to inpatient hospital stays to determine if there was any way for the hospital to increase reimbursement by increasing the severity of the secondary diagnoses recorded for certain patients. According to the lawsuit, the employees allegedly focused on lab test results which might indicate the presence of a complicating secondary diagnosis such as malnutrition or respiratory failure, and advised treating doctors to include such a diagnosis in the medical record, even if the condition was not actually diagnosed or treated during the hospital stay, in violation of billing rules adopted by federal health benefit programs. These false diagnoses were reported to the HSCRC, which relied upon these false statements to determine Bayview’s rate of reimbursement for inpatient hospital stays in subsequent years. The settlement agreement provides that the individuals filing the complaint, which led to the Government’s investigation of Bayview, will receive twenty percent of the total settlement, or $550,000.

Bayview denies the allegations.

Enacted during the Civil War, the False Claims Act is the government’s primary civil tool to combat fraud and abuse in federal programs and procurement. The Act allows the government to recover triple the amount of its actual damages, plus a civil penalty of $5,500 to $11,000 for each false claim and permits the payment of a portion of any settlement or judgment under the Act to individuals who bring fraud to the attention of authorities.

United States Attorney Rod J. Rosenstein commended the investigative work performed by the Department of Health and Human Services Office of the Inspector General. Mr. Rosenstein also thanked Assistant U.S. Attorney Jamie M. Bennett, who handled the case.



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