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Department of Justice
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Friday, December 18, 2015

32 Hospitals to Pay U.S. More Than $28 Million to Resolve False Claims Act Allegations Related to Kyphoplasty Billing

Thirty-two hospitals located throughout 15 states have agreed to pay the United States a total of more than $28 million to settle allegations that the health care facilities submitted false claims to Medicare for minimally-invasive kyphoplasty procedures, the Justice Department announced today.  The Justice Department has now reached settlements with more than 130 hospitals totaling approximately $105 million to resolve allegations that they mischarged Medicare for kyphoplasty procedures. 

Kyphoplasty is a minimally-invasive procedure used to treat certain spinal fractures that often are due to osteoporosis.  In many cases, the procedure can be performed safely and effectively as an outpatient procedure without any need for a more costly inpatient hospital admission.  The settlements announced today resolve allegations that the 32 settling hospitals frequently billed Medicare for kyphoplasty procedures on a more costly inpatient basis, rather than an outpatient basis, in order to increase their Medicare billings.

“Charging the government for higher cost inpatient services that patients do not need wastes the country’s vital health care dollars,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice is committed to ensuring that Medicare funds are expended appropriately, based on the medical needs of patients rather than the desire to maximize hospital profits.”

The settling facilities and the amounts they have agreed to pay, include the following: 

  • The Cleveland Clinic in Cleveland, Ohio, has agreed to pay $1.74 million.

  • Citrus Memorial Health System in Inverness, Florida, has agreed to pay $2.6 million.

  • Cullman Regional Medical Center in Cullman, Alabama, has agreed to pay $350,000.

  • Martin Memorial Medical Center in Stuart, Florida, has agreed to pay $2 million.

  • MultiCare Tacoma General Hospital in Tacoma, Washington, has agreed to pay $983,000.

  • Norwalk Hospital in Norwalk, Connecticut, has agreed to pay $920,000.

  • Princeton Community Hospital Association in Princeton, West Virginia, has agreed to pay $1,513,500.

  • Sacred Heart Medical Center in Spokane, Washington, has agreed to pay $906,000.

  • Sarasota Memorial Hospital in Sarasota, Florida, has agreed to pay $972,000.

  • Spartanburg Regional Health Services District Inc. in Spartanburg, South Carolina, has agreed to pay $1.725 million.

  • St. Cloud Hospital in St. Cloud, Minnesota, has agreed to pay $500,000.

  • Tampa General Hospital in Tampa, Florida, has agreed to pay $2 million.

  • Five hospitals affiliated with Community Health Systems Inc., in Franklin, Tennessee, have agreed to pay a total of $3.5 million.These include:Crestwood Medical Center in Huntsville, Alabama; St. Joseph’s Hospital in Fort Wayne, Indiana; Carolinas Hospital System in Florence, South Carolina; Mary Black Health System in Spartanburg, South Carolina; and Trinity Medical Center in Birmingham, Alabama.

  • Five hospitals affiliated with Tenet Health Care Corporation in Dallas, Texas, have agreed to pay a total of $2.2 million. These include:East Cooper Medical Center in Mt. Pleasant, South Carolina; North Fulton Hospital in Roswell, Georgia; Providence Memorial Hospital in El Paso, Texas; St. Francis Hospital in Memphis, Tennessee; and Sierra Medical Center in El Paso.

  • Five hospitals formerly owned and operated by Health Management Associates Inc., in Naples, Florida, have agreed to pay a total of $2 million.These include:Biloxi Regional Medical Center in Biloxi, Mississippi; Davis Regional Medical Center in Statesville, North Carolina; Lancaster Regional Medical Center in Lancaster, Pennsylvania; Physicians Regional Medical Center in Naples, Florida; and Riley Hospital in Meridian, Mississippi.

  • Three hospitals affiliated with BayCare Health System in Clearwater, Florida, have agreed to pay a total of $1.5 million.These include:Winter Haven Hospital in Winter Haven, Florida; St. Joseph’s Hospital in Tampa, Florida; and St. Anthony’s Hospital in St. Petersburg, Florida.

  • Two hospitals affiliated with Banner Health in Phoenix, Arizona, have agreed to pay a total of $2.685 million.These include Banner Boswell Medical Center in Sun City, Arizona, and Banner Thunderbird Medical Center in Glendale, Arizona.

“As has been shown throughout this successful investigation, we will never allow hospitals to put profits ahead of patients,” said U.S. Attorney William J. Hochul Jr. of the Western District of New York. “Decisions regarding potential procedures should be made using sound medical judgment only, not with an eye toward increasing Medicare reimbursements. The public should be assured that any hospital involved in improper kyphoplasty billing will be held accountable for its actions.”      

In addition to settlements with over 130 hospitals, the government previously settled with Medtronic Spine LLC, the corporate successor to Kyphon Inc., for $75 million to settle allegations that the company caused false claims to be submitted to Medicare by counseling hospital providers to perform kyphoplasty procedures as inpatient rather than outpatient procedures.       

All but three of the settling facilities announced today were named as defendants in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant.  The lawsuit was filed in federal district court in Buffalo, New York, by Craig Patrick and Charles Bates.  Patrick is a former reimbursement manager for Kyphon, and Bates was formerly a regional sales manager for Kyphon in Birmingham.  The whistleblowers will receive a total of approximately $4.75 million from the settlements announced today. 

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $26.7 billion through False Claims Act cases, with more than $16.8 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlements were the result of a coordinated effort among the U.S. Attorney’s Office for the Western District of New York, the Civil Division’s Commercial Litigation Branch and the Department of Health and Human Services’ Office of Inspector General and Office of Counsel to the Inspector General.

The claims resolved by these settlements are allegations only, and there have been no determinations of liability. 

Healthcare Fraud
Updated January 8, 2016