Banner Health has agreed to pay $18 million to settle false claims allegations, the Department of Justice announced.
The settlement resolves a whistleblower case against the health system, which alleged that 12 of its hospitals in Arizona and Colorado admitted patients who could have been treated on an outpatient basis to boost Medicare payouts, according to the announcement.
The Banner hospitals submitted these claims between Nov. 1, 2007 and Dec. 31, 2016, according to DOJ. The settlement also resolves charges that Banner's hospitals falsely inflated reports to Medicare about the number of hours patients were in outpatient observation during that window.
"Hospitals that bill Medicare for more expensive services than are necessary will be held accountable," Christian J. Schrank, special agent in charge for the Department of Health and Human Services Office of Inspector General, said in the announcement. "Medical decisions should be made based on patients' conditions and needs, not on providers' profits."
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As part of the settlement, Banner Health will also enter into an integrity agreement with OIG, requiring it to participate in "significant compliance efforts" for the next five years. An independent company will review the accuracy of claims made to federal payers.
The whistleblower in the case, former employee Cecilia Guardiola, will earn $3.3 million of the settlement.
Banner Health also found itself in legal hot water when a group of people impacted by a 2016 data breach sued the system over the breach, saying that hacking left them at risk for identity theft. The system is also facing an investigation by the Office for Civil Rights.
An Arizona judge recently dismissed a number of the plaintiffs' complaints in a class-action suit over the breach, but is allowing allegations of unjust enrichment, negligence and violation of the Arizona Consumer Fraud Act to move forward.