You are here

Justice News

Department of Justice
U.S. Attorney’s Office
Northern District of Illinois

Monday, December 9, 2013

Government Intervenes In False Claims Lawsuit Against IPC The Hospitalist Company, Alleging Overbilling Of Physician Services

CHICAGO ― The United States has intervened in a civil lawsuit against Californiabased IPC The Hospitalist Company, Inc., and its subsidiaries (IPC), alleging that IPC submitted false claims to federal health care programs, the U.S. Attorney’s Office and the Justice Department announced today. The lawsuit, which was unsealed Friday in U.S. District Court in Chicago, alleges that IPC violated state and federal False Claims Acts by knowingly engaging in systematic overbilling for hospital evaluation and management services billed to Medicare, Medicaid, and other federal health benefit programs.

IPC, based in North Hollywood, Calif., is one of the largest providers of hospitalist services in the United States, employing physicians and other health care providers who work in more than 1,300 facilities in 28 states. Hospitalists are physicians who work only in hospitals and other long-term care facilities, overseeing and coordinating inpatient care for patients from admission to discharge.

The lawsuit alleges that IPC physicians sought payment for higher and more expensive levels of medical service than were actually performed ― a practice commonly referred to as “upcoding.” Specifically, the lawsuit alleges that IPC encouraged its physicians to bill at the highest levels regardless of the level of service provided, trained physicians to use higher level codes and encouraged physicians with lower billing levels to “catch up” to their peers.

“We continue to be vigilant in our enforcement efforts to ensure that health care programs funded by the taxpayers pay only for appropriate costs,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.

The lawsuit was filed under seal in 2009 by Dr. Bijan Oughatiyan, of Dallas, who worked as a hospitalist for IPC in San Antonio from 2003 to 2008, under the qui tam or whistleblower provisions of the False Claims Act. The federal law and similar state statutes permit private individuals to sue for false claims on behalf of the government and to share in any recovery. The Act also allows the government to intervene or take over the lawsuit, as it has done in this case, and to recover three times its damages plus civil penalties ranging from $5,500 to $11,000 for each false claim submitted.

The government investigated Dr. Oughatiyan’s allegations and filed a notice of intervention, asking at the same time that the complaint be unsealed. Chief U.S. District Judge Ruben Castillo last week ordered the case unsealed and granted the government’s request for 120 days to file its own complaint against IPC and related defendants, announced Zachary T. Fardon, United States Attorney for the Northern District of Illinois.

According to Dr. Oughatiyan’s 2009 complaint, more than half of IPC’s revenues ― more than $125 million in 2008 alone ― came from government medical insurers, including Medicare and Medicaid. “IPC’s upcoding scheme has caused those Government health insurers to overpay millions of dollars to IPC, and has adversely impacted patient care,” the suit states.

The lawsuit alleges that IPC directed and encouraged its physicians to engage in systematic overbilling of the codes submitted to Medicare, Medicaid, and other health benefit programs for evaluation and management procedures such as admission, subsequent hospital visits, and discharge of patients. Based on IPC=s regular and detailed monitoring of the codes billed by individual physicians, the lawsuit alleges that IPC was aware that its physicians were using the highest level billing codes (those which require the most work and are reimbursed at the highest amounts) at rates far in excess of what would normally be expected. It further alleges that IPC knew and/or should have known that its physicians could not have actually been performing the services at the levels for which claims were submitted.

This intervention 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 $17 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The matter is being jointly handled by the U.S. Attorney’s Office for the Northern District of Illinois and the Civil Frauds Section of the Commercial Litigation Branch of the Justice Department’s Civil Division, with assistance from the U.S. Department of Health and Human Service’s Office of Inspection General, the Office of Personal Management’s Office of Inspector General, and the Railroad Retirement Board’s Office of Inspector General. The government is being represented by Assistant U.S. Attorney Eric Pruitt and DOJ Senior Trial Counsel Elizabeth Rinaldo.

The case is captioned United States ex rel. Oughatiyan v. IPC The Hospitalist Company, Inc., et al., No. 09 C 5418 (N.D. Ill.). The claims asserted against IPC are allegations only, and there has been no determination of liability. In a civil case, the government has the burden of proving the allegations by a preponderance of the evidence.

Updated July 23, 2015