Scripps Health will pay $1.5M to settle whistleblower suit over billing errors

Whistleblower
The whistleblower claimed that the San Diego-based health system unlawfully billed Medicare or TRICARE for physical therapy services on behalf of a physician who was not present while the services were rendered. (Getty/Imilian)

Scripps Health has agreed to pay $1.5 million to settle allegations that it violated the False Claims Act by charging federal healthcare programs for physical therapy services that were rendered by therapists who did not have billing privileges and weren’t supervised by an authorized provider.

The settlement resolves allegations filed in a 2016 lawsuit by Suzanne Forrest, a former Scripps employee, under the qui tam provisions of the False Claims Act, according to the U.S. Department of Justice. As part of the settlement, Forrest will receive $225,000.

However, the Justice Department noted that the claims resolved by the settlement are allegations only and there has been no determination of liability.

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Forrest claimed that the San Diego-based health system unlawfully billed Medicare or TRICARE for physical therapy services on behalf of a physician who was not present while the services were rendered. The case, filed in the U.S. District Court for the Southern District of California, claimed that Scripps persisted in this conduct despite warnings from the whistleblower.

"Fraud is often subtle," Russell L. Kornblith, Sanford Heisler Sharp's New York Managing Partner and one of the lead attorneys on the case, said in an announcement. "Particularly in the healthcare sector, the government depends on whistleblowers in the know to speak up when they see something wrong. Here, the Relator saw claims that were not reimbursable and repeatedly warned Scripps. She rightfully deserves a reward for doing so."

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Medicare and TRICARE limit billing privileges to enrolled providers. Services from unenrolled providers can be billed as “incident to” the services of an enrolled physician, but only if the physician provided direct supervision. 

“Patients rightly expect qualified medical providers, or at least professionals working under the supervision of authorized providers,” said Christian J. Schrank, special agent in charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “As charged, these billing practices cheat patients, taxpayers and the Medicare program.”  

Scripps said in a statement to The San Diego-Union Tribune that the settlement was due to a technical error in processing Medicare bills for physical therapy treatments. The healthcare system said it provided all the services billed to the federal government and ensured patients received high-quality care. “Scripps had reached a settlement to avoid continuing legal costs and uncertainty.”

Furthermore, Scripps told the Tribune that it self-reported the technical error to its Medicare contractor, unaware that the civil suit was filed. Federal officials weren’t aware of the self-disclosure when Forrester filed the lawsuit, the statement said. 

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