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Press Release

Nine Hospitals in Seven States to Pay U.S. More Than $9.4 Million to
Resolve False Claims Act Allegations Related to Kyphoplasty

For Immediate Release
Office of Public Affairs

Nine hospitals located in Alabama, Indiana, Florida, Michigan, South Carolina, New York and Minnesota have agreed to pay the United States more than $9.4 million to settle allegations that the health care facilities submitted false claims to Medicare, the Justice Department announced today. The settlements resolve allegations that the hospitals overcharged Medicare between 2000 and 2008 when performing kyphoplasty, 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 as a less costly out-patient procedure, but the government contends that the hospitals performed the procedure on an in-patient basis in order to increase their Medicare billings.

The settling facilities and the amount being paid by each to the United States are Ball Memorial Hospital, Muncie, Ind. ($1,995,431); Bethesda Memorial Hospital, Boynton Beach, Fla. ($356,079); Bloomington Hospital, Bloomington, Ind. ($1,443,848); Genesys Regional Medical Center, Grand Blanc, Mich. ($931,742); Huntsville Hospital, dba The Health Care Authority of the City of Huntsville, Huntsville, Ala. ($1,992,756); Palmetto Health dba Palmetto Health Baptist Hospital, Columbia, S.C. ($1,861,083.14); St. Elizabeth Medical Center, Utica, N.Y. ($195,976); St. Mary’s of Michigan Hospital, Saginaw, Mich. ($260,065.21); and United Hospital, St. Paul, Minn. ($428,656).

"These hospitals put profits ahead of sound medical judgment," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "The Justice Department is committed to protecting Medicare funds from waste and abuse."

The settlement with these facilities follows the settlements that the government reached in May and September 2009 with nine other hospitals for alleged kyphoplasty-related Medicare fraud claims, as well as the government’s May 2008 settlement with Medtronic Spine LLC, corporate successor to Kyphon Inc. Medtronic Spine paid $75 million to settle allegations that the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as an in-patient procedure, even though in many cases the minimally-invasive procedure should have been done on an out-patient basis.

"The U.S. Attorney’s Office will continue to aggressively and appropriately pursue False Claims Act allegations of wrongdoing consistent with the commitment of the Department of Justice," said William J. Hochul, Jr., U.S. Attorney for the Western District of New York in Buffalo.

All but two of the settling facilities – St. Elizabeth Medical Center and United Hospital – were named as defendants in a lawsuit filed under the False Claims Act in 2008 in federal district court in Buffalo, N.Y., by Craig Patrick and Charles Bates. The qui tam, or whistleblower, provisions of the False Claims Act permit private citizens, called relators, to file an action on behalf of the United States and share in any recovery. Mr. Patrick of Hudson, Wisc., is a former reimbursement manager for Kyphon, and Mr. Bates is a former regional sales manager for Kyphon in Birmingham, Ala. The relators will receive a total of approximately $1.5 million as their share of the settlement proceeds.

"It is critical that providers make patient admission decisions based on medical necessity and the level of care needed rather than on the Medicare payment they will receive," said Daniel R. Levinson, Inspector General for the Department of Health and Human Services. "The Office of Inspector General will continue to pursue providers who abuse the Medicare Trust Fund and divert for personal gain resources that should be going to pay for necessary care."

Assistant Attorney General West noted that the settlement with these hospitals 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 and Office of Counsel to the Inspector General.

This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $2.2 billion since January 2009 in cases involving fraud against federal health care programs.  The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3 billion.

Updated September 15, 2014

Press Release Number: 10-578