Skip to main content
Press Release

Long Island Physician to Pay U.S. $388,000 to Settle
False Claims Act Allegations Related to Overbilling Medicare

For Immediate Release
Office of Public Affairs

Richard S. Obedian, a Long Island, N.Y., orthopedic surgeon, will pay the government $388,000 to settle allegations that he violated the False Claims Act by submitting false claims to Medicare for minimally invasive spine procedures, the Justice Department announced today. 
Allegedly, throughout 2005, Obedian knowingly submitted improper claims to Medicare for a procedure known as kyphoplasty, a minimally invasive procedure used to treat compression fractures of the spine that often are due to osteoporosis.  Prior to 2006, Medicare billing rules required the use of a specific billing code to denote the performance of a kyphoplasty procedure.  Those same rules precluded the use of other codes assigned to more invasive and complicated, and therefore more expensive, surgeries.  The government alleged that Obedian knowingly circumvented lower payment rates for kyphoplasty procedures performed throughout 2005 by using incorrect billing codes assigned to more complicated surgeries, thereby inflating his Medicare reimbursements.    
“We expect physicians who participate in federal health care programs to bill for their services accurately and honestly,” said Stuart F. Delery, Assistant Attorney General for the Civil Division.  “Neither the Department of Justice nor the taxpayers will tolerate those who knowingly overbill federal health care programs.” 

“We will continue to vigorously enforce the False Claims Act for the protection of the taxpayers and the United States government,” said William J. Hochul, Jr., U.S. Attorney for the Western District of New York. 

“The Obedian settlement vividly illustrates the role of dynamic law enforcement partnerships in the battle to protect Medicare from those who would bill inappropriately,” said Thomas O’Donnell, Special Agent in Charge of the Office of Inspector General for the U.S. Department of Health and Human Services, New York region.  “Our office continues working to ensure that taxpayer money is spent wisely.”

“This resolution is a prime example of CMS’ successful partnership with the Office of Inspector General for the Department of Health and Human Services and the Department of Justice to carry out our mission to prevent and detect Medicare fraud and protect the Medicare Trust Fund,” said Peter Budett, Deputy Administrator and Director, Center for Program Integrity in the Centers for Medicare and Medicaid Services.

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 Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius.  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 $14.8 billion through False Claims Act cases, with more than $10.8 billion of that amount recovered in cases involving fraud against federal health care programs.
This settlement was the result of a coordinated effort among the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of New York and the Department of Health and Human Services’ Office of Inspector General.  The settlement is part of the Department’s broader investigation into kyphoplasty billing practices among hospitals, which has resulted in settlements with more than 100 hospitals totaling approximately $75 million to resolve allegations that they mischarged Medicare for kyphoplasty procedures.  In addition, the government previously settled with Medtronic Spine LLC, the corporate successor to Kyphon Inc., for $75 million to settle allegations that the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as inpatient rather than outpatient procedures.
The claims resolved by this settlement are allegations only, and there has been no determination of liability.  

Updated September 15, 2014

Press Release Number: 13-944