Hospital Medicare Fraud Settlements Bring Total Recovered from Whistleblower Lawsuit to $101 Million

WASHINGTON, Jan. 4, 2011 /PRNewswire/ -- Seven more hospitals have agreed to pay the government a total of $6.3 million to settle a whistleblower lawsuit that exposed the fraudulent billing practices of hospitals that overcharged Medicare for a type of back surgery known as "kyphoplasty," the Department of Justice announced today.

The hospitals are located in Alabama, Florida, Mississippi, North Carolina, South Carolina and Texas.

"These hospitals chose to keep kyphoplasty patients overnight simply for their financial needs rather than for the patients' needs," said Matt Smith, a Washington, DC, attorney with Phillips & Cohen LLP, which represented the whistleblowers. "In most cases, kyphoplasty can be done safely as an outpatient procedure, which costs Medicare much less than an overnight stay."

The settlements bring the government's total recoveries from the "qui tam" (whistleblower") lawsuit to $101 million, collected from 25 hospitals and Medtronic Spine LLC, formerly known as Kyphon Inc. Kyphon sold the equipment and materials used to perform kyphoplasty and advised the hospitals on billing practices for the procedure.

Kyphoplasty is used to treat certain spinal compression fractures. A balloon device pumps up the compressed vertebra then is removed and bone cement is injected into the cavity that the balloon created. Patients generally recover from the procedure and are able to walk around within a few hours.

The whistleblowers, Chuck Bates and Craig Patrick, are former employees of Kyphon Inc. Phillips & Cohen filed a "qui tam" (whistleblower) lawsuit on their behalf against Kyphon and a number of hospitals in 2008 federal district court in Buffalo. The False Claims Act provides that whistleblowers who bring qui tam lawsuits receive a reward of 15 percent to 25 percent of the amount the government recovers as a result of their case.

"The whistleblower lawsuit continues to return money to the federal fisc, in large part due to the hard work and diligence of the U.S. Attorney's Office in Buffalo," said Tim McCormack, a Washington, DC, attorney with Phillips & Cohen LLP. "Because two ordinary citizens decided to challenge a fraudulent billing practice, hospitals are repaying millions they took from Medicare."

Individual hospital settlement amounts:

Lakeland Regional Medical Center, Lakeland, Florida -- $1,660,134

Seton Medical Center, Austin, Texas -- $1,232,956

Greenville Memorial Hospital, Greenville, S.C.-- $1,026,764

The Health Care Authority of Lauderdale County and the City of Florence, Ala., dba the Coffee Health Group (formerly known as Eliza Coffee Memorial Hospital) -- $676,038

Presbyterian Orthopaedic Hospital, Charlotte, N.C. -- $637,872

St. Dominic-Jackson Memorial Hospital, Jackson, Mississippi -- $555,949

The Health Care Authority of Morgan County - City of Decatur dba Decatur General Hospital, Decatur, Alabama -- $537,893

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