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Press Release

Carolina Healthcare System Agreems To Pay $6.5 Million To Settle False Claims Act Allegations

For Immediate Release
U.S. Attorney's Office, Western District of North Carolina

CHARLOTTE, N.C. - U.S. Attorney Jill Westmoreland Rose announced today that the Charlotte-Mecklenburg Hospital Authority, dba Carolinas Healthcare System (CHS), has agreed pay the Government $6.5 million to resolve allegations that the company violated the False Claims Act, by “up-coding” claims for urine drug tests in order to receive higher payment than allowed for the tests.


U.S. Attorney Rose is joined in making today’s announcement by North Carolina Attorney General Josh Stein, and Derrick L. Jackson, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General, Office of Investigations - Atlanta Region.


“Medical service providers must respect public resources in government health care programs,” said U.S. Attorney Rose. “As more Americans struggle with healthcare costs, we must ensure that our programs are efficient and compliant. For those medical providers who seek to unlawfully and unfairly take advantage of government health care programs, this case resolution should serve as fair warning.”


“Healthcare providers must accurately represent the services they are providing,” said Attorney General Stein. “Up-coding is an unacceptable waste of taxpayer dollars, and my office will not allow it.”


“When health care companies try to boost their profits by billing federal health care programs for more expensive services than they actually provided, the Office of Inspector General will ensure they are held accountable for their deceptive schemes,” said Special Agent in Charge Jackson.


According to court documents, from 2011 to 2015, CHS conducted urine drug tests, categorized as “moderate complexity” tests by the Food and Drug Administration (FDA), but submitted claims that indicated the company had conducted “high complexity” tests. Claims submitted to federal health care programs include a code that identifies the services provided and that triggers a certain payment. The government alleged that CHS engaged in a practice referred to as “up-coding,” by submitting claims using code G0431, which should be used only for tests classified as “high complexity” by the FDA, instead of using code G0434, which is the code for moderately complexity tests, which triggers a payment of approximately $20.00. As a result of CHS’s up-coding practices, the government alleges that federal health care programs paid CHS, and certain facilities under contract with CHS, approximately $80 more per test for the claims submitted with the higher paying code.


The allegations arose from a lawsuit filed by a whistleblower, Mark McGuire (the Relator), a former laboratory director for CHS, under the qui tam provisions of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. The act also allows the government to intervene and take over the action. The government conducted the investigation and intervened in this action to effectuate the settlement. Mr. McGuire will receive $1,365,000 from the settlement.


The settlement is the result of the coordinated effort between the United States Attorney’s Office for the Western District of North Carolina, the State of North Carolina’s Medicaid Investigations Division and the Department of Health and Human Services Office of the Inspector General.


This case is captioned United States ex rel. Mark McGuire v. The Charlotte-Mecklenburg Hospital Authority, et al., Case No. 3:15-cv-147. The claims resolved in this settlement are allegations only and there has been no determination of liability.

Updated July 3, 2017