University Hospital Settles Medicare Fraudulent Billing Claims For $88.9 Million
November, 2008
On September 10, 2008, Staten Island University Hospital agreed to pay federal and state authorities $88.9 million to settle claims that it over billed or improperly charged Medicaid, Medicare and TRICARE, the military’s health insurance program. This settlement is among the largest for a healthcare fraud case against a single hospital in U.S. history.
In United States of America v. Staten Island University Hospital, Gilbert Lederman, M.D., (CV-04-2483), the US Attorney alleged that Staten Island University Hospital (“Hospital”) illegally advertised and administered Stereotactic Body Radiosurgery to cancer patients, and fraudulently billed Medicare and Medicaid for non-reimbursable treatments. The government established its claims with the aid of two whistleblowers - - Elizabeth Ryan, the widow of a former patient, and Dr. Miguel Tirado, a former director of the Hospital’s Chemical Dependency Services. The US Attorney alleged that the Hospital performed the alternative cancer treatment procedure on thousands of patients on an out-patient basis and fraudulently billed the government for it. The treatment, aggressively pushed by the Hospital’s former head of radiation oncology, Dr. Gilbert Lederman, was not covered by Medicare or TRICARE. This procedure was performed on lung-cancer patients and billed as brain-cancer treatment. The Hospital’s response stated that this was done because there was no billing code for lung-cancer stereotactic radiosurgery until 2004.
The US Attorney further alleged that the Hospital fraudulently billed Medicare and Medicaid between July, 1994, and June, 2000, for treating alcohol and substance abuse detoxification patients in non-licensed beds at its Prince’s Bay campus. The Hospital was authorized to treat detoxification patients in 56 beds. However, the Hospital also administered such care in 12 other non-certified beds in a locked, separate wing and concealed that wing’s existence from the state Office of Alcoholism and Substance Abuse Services. The Hospital’s response stated that the non-certified rooms were used because the amount of patients requiring detox treatment at a given time often exceeded the number of licensed beds. Similarly, some psychiatric patients admitted to the Hospital between July, 2003, and September, 2005, were also treated at non-licensed beds due to overflow. Such patients should have been treated and kept in the emergency rooms until a certified psychiatric bed became available. Medicare pays a share of graduate medical education costs at teaching hospitals, such as the Hospital. However, the US Attorney alleged that the Hospital inflated its resident count on cost reports from 1996 and 2003. The Medicare payments to the Hospital were based on the number of residents in those years, which the Hospital inflated.
Under the Settlement entered in September 10, 2008, the Hospital will pay just over $74 million to the federal government and $14.9 million to New York State. This settlement covers all the claims arising from fraudulent billing practices dating as far back as 1994 and as recently as September, 2005. Under this settlement, the Hospital will immediately pay the federal settlement and the state settlement will be paid over three years. Despite the huge paybacks, the settlement does not contain an admission of liability on the Hospital’s part. The two whistleblowers will each receive a portion of the government’s settlement. Dr. Tirado will receive approximately $5.3 million and Ms. Ryan will receive $3.75 million. This settlement does not include the two pending multi-billion dollar civil fraud lawsuits filed in federal court by the families of 20 Italian cancer patients. Those plaintiffs allege they were lured to the hospital’s Ocean Breeze campus for cancer treatment with unrealistic promises of cures.
Learning Point
Hospitals and doctors must be very careful in their billing to Medicare and Medicaid. Medical service providers must also strictly adhere to rules set out by such government programs or risk facing severe penalties.
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