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Staten Island University Hospital to Pay the U.s. $74 Million to Settle Claims of Defrauding Federal Health Care Programs

FOR IMMEDIATE RELEASE
September 15, 2008

Settlement Constitutes One of the Largest Civil Fraud Recoveries Ever Against a Single U.S. Hospital

WASHINGTON - Staten Island University Hospital (SIUH) has agreed to pay the United States $74,032,565 to settle claims that the hospital defrauded Medicare, Medicaid and the military’s health insurance program, TRICARE, announced Benton J. Campbell, U.S. Attorney for the Eastern District of New York and Gregory G. Katsas, Assistant Attorney General for the Justice Department’s Civil Division. In addition, the hospital will pay the State of New York $14,883,883, representing damages sustained by the state’s Medicaid Program. In total, SIUH will pay $88,916,448.

Today’s settlement, in part, resolves suits filed on behalf of the government in the United States District Court for the Eastern District of New York by two individuals. Dr. Miguel Tirado, a former SIUH Director of Chemical Dependency Services, who filed suit under the federal False Claims Act and the New York State False Claims Act, alleged that the hospital had fraudulently billed Medicaid and Medicare for inpatient alcohol and substance abuse detoxification treatment. The government’s investigation established that, during the period July 1, 1994 through June 30, 2000, SIUH submitted claims for payment for detoxification treatment provided to patients in beds for which SIUH had received no certificate of operation from the New York State Office of Alcoholism and Substance Abuse Services (OASAS).

Although SIUH was authorized to provide inpatient detoxification care to patients in 56 beds, it administered treatment in 12 additional beds located in a locked, separate wing and concealed the existence of the wing from OASAS. SIUH has agreed to pay the United States $11,824,056 and $14,883,883 to the State of New York according to an agreement that has been approved by U.S. District Judge Edward R. Korman. New York State’s claim was litigated by the New York State Attorney General’s Office, Medicaid Fraud Control Unit.

Elizabeth M. Ryan, widow of an SIUH cancer patient, asserted in her federal False Claims Act suit that SIUH fraudulently billed Medicare for stereotactic body radiosurgery treatment that was provided on an out-patient basis to cancer patients. The investigation established that from1996 through 2004, SIUH defrauded Medicare and TRICARE by knowingly using incorrect billing codes for cancer treatment performed at the hospital. By using incorrect codes, SIUH obtained reimbursement for treatment that was not covered by Medicare or TRICARE. SIUH will pay the United States $25,022,766 to settle this claim according to an agreement that has been approved by U.S. District Judge John Gleeson.

As a result of today’s settlement, Tirado will receive $2.3 million from the federal government and $2.97 million from New York. Ryan will receive $3.75 million as her portion of the federal recovery. The federal False Claims Act and newly-enacted New York state False Claims Act permit private individuals to file suits on behalf of the government and receive a portion of the recovery.

The government’s other two claims were resolved prior to the filing of suit. The United States had determined that SIUH deliberately inflated its resident count from the 1996 cost report year through the 2003 cost report year. Medicare pays a share of the cost of Graduate Medical Education at teaching hospitals such as SIUH. The amount paid is determined by Medicare annually based upon “cost reports” submitted by the hospitals. SIUH has agreed to pay the United States $35,706,754 to settle this claim.

Also, today’s settlement concerns SIUH’s billings to Medicare and Medicaid for treatment of psychiatric patients in unlicensed beds during the period July 2003 through September, 2005. The hospital has agreed to pay the United States $1,478,989 to settle this claim.

The United States’ investigation was led by the United States Attorney’s Office for the Eastern District of New York.

“Those who defraud and jeopardize the nation’s vital, federally-funded health care programs will be aggressively investigated and held to account,” stated Benton J. Campbell, U.S. Attorney for the Eastern District of New York. “Only by ensuring that the billing and cost guidelines of Medicare and Medicaid are scrupulously followed can we have confidence that affordable healthcare will continue to be available for those in need.”

“The resolution of these claims against SIUH demonstrates the federal government’s continuing commitment to protect federally-funded health care programs from any and all attempts by those who would knowingly seek improper payments,” said Gregory G. Katsas, Assistant Attorney General for the Justice Department’s Civil Division.

In addition, SIUH has agreed to enter into a Corporate Integrity Agreement with the Office of Inspector General, Department of Health and Human Services (OIG-HHS) under which the hospital will maintain a compliance program to help ensure against a recurrence of fraud.

“Settlements such as this demonstrate yet again that submitting fraudulent claims to Medicare and Medicaid artificially raises health care costs and in turn steals from those who depend on these government medical programs,” said HHS Inspector General Daniel R. Levinson. “The Office of Inspector General, working with our federal and state law enforcement partners, will continue to aggressively investigate and prosecute such fraud.”

The government’s investigation was led by the U.S. Attorney’s Office for the Eastern District of New York and its claims were litigated by Assistant U.S. Attorneys Richard K. Hayes and Laura D. Mantell, and Emily J. Rosenthal, Affirmative Civil Enforcement Auditor. Marie V. Bonkowski, Senior Trial Counsel in the Commercial Litigation Branch of the Justice Department’s Civil Division assisted in the investigation.

The Corporate Integrity Agreement was negotiated by Stephen D. Solomon, Deputy Chief, Administrative and Civil Remedies Branch, Office of Counsel to the Inspector General for the Department of Health and Human Services. The United States’ claims were investigated with the assistance of the New York Regional Office, Office of Investigations, OIG-HHS.




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