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Press Release

U.S. Files Lawsuit Against IPC The Hospitalist Company, Alleges Overbilling Of Federal Health Insurers For Physician Services

For Immediate Release
U.S. Attorney's Office, Northern District of Illinois

CHICAGO — The United States filed a civil lawsuit against California-based IPC The Hospitalist Company, Inc., and its subsidiaries, alleging that IPC submitted false claims to federal health care programs, the U.S. Attorney’s Office announced today. The complaint alleges that IPC violated the 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.

The government’s complaint, intervening in a whistleblower’s lawsuit, was filed yesterday in U.S. District Court. Last December, when the whistleblower’s lawsuit was unsealed, the United States gave notice of its intention to file its own complaint.

IPC, based in North Hollywood, Calif., is one of the largest hospitalist companies in the United States, employing 2,500 hospitalist physicians and other health care providers 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 government’s 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 and pressured physicians with lower billing levels to “catch up” to their peers.

“IPC’s upcoding scheme caused, and still continues to cause, Medicare, Medicaid and other federal payors to overpay millions of dollars to IPC,” the suit states. “As a result of corporate/management pressure, and/or in keeping with IPC corporate culture and expectations to maximize billings, IPC hospitalists have routinely and systematically submitted upcoded claims for payment to the United States,” it adds.

The lawsuit was originally 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.

As alleged in the government’s complaint, more than half of IPC’s revenues have come historically from government medical insurers, including Medicare and Medicaid, as well as the TRICARE Program, the Federal Employee Health Benefits Program, and the Railroad Retirement Medicare Program.

The lawsuit alleges that IPC pressured and encouraged its physicians to engage in systematic overbilling of the codes submitted to government 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 or should have known that its physicians could not have actually been performing the services at the levels for which claims were submitted.

The complaint illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered 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 case is being handled by the U.S. Attorney’s Office for the Northern District of Illinois and the Fraud 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 Inspector 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 27, 2015