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Press Release

Cape Cod Hospital to Pay $24.3 Million to Resolve False Claims Act Allegations Concerning Its Failure to Comply with Medicare Rules for Cardiac Procedures

For Immediate Release
Office of Public Affairs

Cape Cod Hospital, based in Hyannis, Massachusetts, has agreed to pay $24.3 million to resolve False Claims Act allegations that it knowingly submitted claims to Medicare for transcatheter aortic valve replacement (TAVR) procedures that failed to comply with Medicare rules specifying the way in which hospitals were required to evaluate patient suitability for the procedures.

Beginning in 2015, Cape Cod Hospital began offering TAVR procedures for patients suffering from aortic stenosis, a serious heart condition that restricts blood flow from the heart to rest of the body. A TAVR procedure involves replacing a patient’s damaged heart valve with an artificial one. Medicare rules at the time required that, prior to performing a TAVR procedure, hospitals engage specified clinical personnel to conduct an independent examination of prospective patients to evaluate their suitability for TAVR, document the rationale for their clinical judgment and make the rationale available to the medical team performing the TAVR procedure. The settlement resolves allegations that from Nov. 1, 2015, through Dec. 31, 2022, Cape Cod Hospital knowingly submitted hundreds of claims to Medicare for TAVR procedures that did not comply with the applicable Medicare requirements. In some instances, not enough physicians examined a patient’s suitability for the procedure, while in other instances the physicians failed to document and share their clinical judgment with the medical team responsible for the TAVR procedure.  

“Hospitals that participate in the Medicare program must abide by applicable coverage and reimbursement rules,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department will hold healthcare providers accountable when they knowingly fail to comply with Medicare reimbursement requirements.”

“Medicare permitted coverage for this newly developed cardiac procedure only under certain conditions to ensure patient safety. Cape Cod Hospital ignored those rules and received millions of dollars from Medicare to which it was not entitled. This conduct persisted for years despite internal warnings,” said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. “This investigation and settlement ensures that patient safety is prioritized over a hospital’s bottom line.”

In connection with the settlement, Cape Cod Hospital has entered into a five-year corporate integrity agreement with the Department of Health and Human Services, Office of Inspector General (HHS-OIG), which provides for an annual review of its paid Medicare claims by an Independent Review Organization.

“Health care providers are expected to follow Medicare rules and bill properly,” said Special Agent in Charge Roberto Coviello of HHS-OIG. “We are committed to pursuing allegations of False Claims Act violations as we work to protect the integrity of the taxpayer-funded Medicare program, and we encourage the public to come forward with information about such conduct.”

Cape Cod Hospital received credit under the department’s guidelines for taking disclosure, cooperation and remediation into account in False Claims Act cases. Among other actions, Cape Cod Hospital voluntarily produced materials, identified the relevant medical records, admitted that it failed to adhere to the applicable Medicare requirements and implemented appropriate remedial measures.

The claims resolved by the resolution announced today include claims that were brought under the qui tam or whistleblower provisions of the False Claims Act by Richard Zelman, a physician formerly employed by Cape Cod Hospital. Under the Act, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Zelman v. Cape Cod Hospital, No. 1:22-cv-11204 (D. Mass.). As part of today’s resolution, Dr. Zelman will receive approximately $4.36 million.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of Massachusetts, with assistance from HHS-OIG and the FBI.

The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800-HHS-TIPS (800-447-8477).

Trial Attorney Kimya Saied of the Fraud Section and Assistant U.S. Attorney Andrew A. Caffrey, III for the District of Massachusetts handled the matter.

Except for the facts admitted by Cape Cod Hospital, the claims in the complaint are allegations only, and there has been no determination of liability.

Updated May 16, 2024

False Claims Act
Press Release Number: 24-622