Fraud alert! California Hospital Pays $10.25M to Resolve Whistleblower Suit Alleging Medically Unnecessary Inpatient Admissions and Kickbacks
On December 12, the DOJ announced that California’s Oroville Hospital will pay $10,250,000 to the United States and the State of California to resolve allegations that it submitted false claims to Medicare and Medicaid for medically unnecessary inpatient hospital admissions, a kickback and physician self-referral scheme, and the use of incorrect diagnosis codes to maximize reimbursements. Oroville Hospital will pay $9,518,954 to the federal government and $731,046 to the State of California.
According to the government, Oroville Hospital admitted patients and billed Medicare and Medicaid for more expensive inpatient hospital stays when inpatient care was not medically necessary and less costly options, such as observation status or outpatient care, would have been appropriate.
The government also alleged that Oroville Hospital illegally incentivized inpatient admissions by paying kickbacks disguised as bonuses to doctors who worked full time at the hospital and were able to use their influence to determine whether patients were admitted. Oroville Hospital’s “bonuses” were based on the volume or value of admissions by these physicians.
The Hospital also allegedly submitted claims to Medicare and Medicaid that included false diagnosis codes for systemic inflammatory response syndrome (SIRS). This resulted in the Hospital’s receipt of excessive reimbursements to which it was not entitled.
U.S. Attorney Phillip A. Talbert for the Eastern District of California said, “Hospitals engaging in kickback schemes betray the trust placed in them by their communities and distort care decisions that should be untainted by illegal kickbacks. This settlement demonstrates my office’s commitment to preserving the integrity of public healthcare programs and ensuring that the well-being of patients remains paramount.”
Oroville Hospital entered into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General. Under the CIA, Oroville is required to implement a risk assessment and internal review process designed to identify and address evolving compliance risks, among other conditions. Additionally, the CIA requires an independent review organization to annually assess the medical necessity and appropriateness of claims billed to Medicare.
The settlement resolves claims under the qui tam or whistleblower provisions of the False Claims Act by Cecilia Guardiola. These provisions allow a private party to file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Cecilia Guardiola v. Oroville Hosp., Case No. 2:20-CV-1558 (EDCA). Guardiola will receive approximately $1.7 million from the federal settlement amount.
Cases like these rely on the public to report any suspected fraud. If you would like to learn more about health care fraud, the False Claims Act, or what it means to be a whistleblower, please contact us. We will connect you with an experienced member of our whistleblower team.
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