Hospital Admits to Having Increased Charges Without Directly Taking Costs Into Account And Generating More Medicare Reimbursements Than It Would Have Otherwise Received

Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States has filed and simultaneously settled a civil health care fraud lawsuit against LENOX HILL HOSPITAL (“LENOX HILL”).  The Government’s Complaint seeks damages and civil penalties under the False Claims Act from LENOX HILL for fraudulently inflating its charges for services provided to Medicare patients to obtain larger supplemental reimbursement, known as “outlier payments,” that Medicare pays to hospitals and other health care providers in cases where the cost of care is unusually high.  In the settlement, LENOX HILL admitted, acknowledged, and accepted responsibility for having increased its charges based on revenue models that did not directly take into account the costs of the services provided, and as a result obtaining Medicare outlier payments it would not otherwise have received.  LENOX HILL also agreed to pay $11,750,000 to resolve the Government’s claims for damages and civil penalties under the False Claims Act.  The settlement was approved today by United States District Court Judge Naomi Reice Buchwald.

Manhattan U.S. Attorney Preet Bharara said: “The Medicare program provides invaluable health care assistance to elderly and disabled Americans. But when hospitals incorrectly bill Medicare, they harm the program and ultimately put that assistance in jeopardy. We will remain vigilant in protecting the integrity of this important program and recovering taxpayer funds from health care institutions that fail to comply with Medicare regulations.” According to the Complaint filed in this case: LENOX HILL inflated its charges to obtain supplemental outlier payments for cases that were not extraordinarily costly and for which outlier payments should not have been paid. Specifically, the hospital intentionally raised its room and board charges and manipulated its overall charge structure to make it appear as though its treatment of certain patients was unusually costly, when in fact it was not. In this manner, LENOX HILL obtained millions of dollars in Medicare outlier payments to which it was not entitled from February 21, 2002 through August 7, 2003. As part of the settlement, LENOX HILL has admitted, acknowledged, and accepted responsibility for the following conduct:

From 2002 to 2003, to increase its revenue, LENOX HILL increased its inpatient charges based on revenue models that did not directly take into account the costs of the services provided. LENOX HILL increased its charges during this period to all third-party payors, and the charge increases had a larger impact on Medicare outlier payments as compared to any other single payor.




As a result, LENOX HILL received Medicare outlier payments that it would not have received if it had not implemented these charge increases.

Pursuant to the settlement, LENOX HILL will pay the United States $11,750,000 within ten days of the settlement to resolve the Government’s claims for damages and civil penalties.

Mr. Bharara thanked the Office of the Inspector General for the U.S. Department of Health and Human Services, the Centers for Medicare and Medicaid Services, and the Civil Division of the U.S. Department of Justice for their assistance with the case.

This case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorneys Lawrence H. Fogelman and Natalie N. Kuehler are in charge of the case. 

12-134

 

 

 

 

Return to Top