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Press Release

County Medical Center and County Agree to Pay $11.4 Million to Resolve False Claims Act Allegations Relating to Medically Unnecessary Inpatient Admissions

For Immediate Release
Office of Public Affairs

San Mateo County Medical Center and San Mateo County (collectively SMMC), located in California, have agreed to pay approximately  $11.4 million to resolve alleged violations of the False Claims Act for submitting or causing the submission of claims to Medicare for non-covered inpatient admissions.

Medicare reimburses only services that are reasonable and necessary for the diagnosis or treatment of illness or injury. The United States alleged that, from Jan. 1, 2013, through Feb. 28, 2017, SMMC admitted certain patients for whom inpatient care was not medically reasonable or necessary, including patients who were admitted for reasons other than medical status, including social reasons and lack of available alternative placements. SMMC billed Medicare for such patients despite SMMC’s knowledge that the costs for admitting them were not reimbursable by Medicare.

“Billing for non-covered hospital stays results in a misuse of federal dollars,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “Today’s settlement demonstrates our continuing commitment to ensure that Medicare pays only for services that are eligible for reimbursement.”

“The financial viability of our Medicare program must be protected for current and future generations,” said Acting U.S. Attorney Stephanie M. Hinds for the Northern District of California. “Medical providers, such as SMMC, who seek to pass on the financial burden of their medically unnecessary hospital admissions to the federal government will be pursued, as today’s settlement reflects.”

“Our agency will continue to aggressively investigate health care providers who bill Medicare for medically unnecessary services. These unlawful actions divert funds for needed care,” said Special Agent in Charge Steven J. Ryan of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Working with our law enforcement partners, we will continue to root out such schemes.”

In connection with the settlement, SMMC entered into a five-year Corporate Integrity Agreement (CIA) with HHS-OIG. The CIA requires SMMC to engage an independent review organization that will perform annual reviews of inpatient admissions that SMMC bills to federal health care programs.

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Felix Levy, a former employee of San Mateo County Medical Center. Under those provisions, 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. Levy v. San Mateo County and the San Mateo County Medical Center, C.A. No. 16-CV-5881 (N.D. Cal.). 

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section; the U.S. Attorney’s Office for the Northern District of California; and HHS-OIG. 

The matter was handled by Trial Attorneys Danielle Sgro and Diana Cieslak and Assistant U.S. Attorneys Michael Pyle, Sharanya Sai Mohan and Jonathan Lee.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Updated August 6, 2021

False Claims Act
Press Release Number: 21-753