January 5, 2011

False Claims Act Allegations Related to Kyphoplasty Snag Seven Hospitals at $6.3 Million

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The Department of Justice yesterday reported that seven hospitals have agreed to pay the federal government more than $6.3 million in settling allegations that they submitted false claims to Medicare.

The hospitals, located in Florida, Mississippi, Texas, South Carolina, North Carolina and Alabama, agreed to settlements, resolving allegations that they overcharged Medicare between the years 2000 and 2008 when performing kyphoplasty in the treatment of spinal fractures often due to osteoporosis, according to the DOJ news release. The DOJ said that in many cases, the minimally-invasive procedure can be performed safely and less costly as an outpatient procedure contending that the hospitals performed the procedure on an in-patient basis in order to increase their Medicare billings.

The settling facilities include the following: Lakeland Regional Medical Center, Lakeland, Fla. ($1,660,134.49); The Health Care Authority of Morgan County – City of Decatur dba Decatur General Hospital, Decatur, Ala. ($537,892.88); St. Dominic-Jackson Memorial Hospital, Jackson, Miss. ($555,949.35); Seton Medical Center, Austin, Texas ($1,232,955.91); Greenville Memorial Hospital, Greenville, S.C. ($1,026,764.01); Presbyterian Orthopaedic Hospital, Charlotte, N.C. ($637,872.57); and The Health Care Authority of Lauderdale County and the City of Florence, Ala., dba the Coffee Health Group, fka Eliza Coffee Memorial Hospital ($676,038.00), according to the DOJ.

The DOJ said the settlements with these facilities follow the settlements that the government reached in May 2009, September 2009, and May 2010 with 18 other hospitals for kyphoplasty-related Medicare claims, as well as the government’s May 2008 settlement with Medtronic Spine LLC, corporate successor to Kyphon Inc. Medtronic Spine paid $75 million to resolve allegations that the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as an in-patient procedure, even though the minimally-invasive procedure should have been done in many cases as an out-patient procedure.

All of the settling facilities were named as defendants in a lawsuit filed under the False Claims Act in 2008 in federal district court in Buffalo, New York by Craig Patrick and Charles Bates, reported the DOJ.

The qui tam, or whistleblower, provisions of the Act permit private citizens, called “relators,” to file lawsuits on behalf of the United States and share in any recovery. Mr. Patrick of Hudson, Wis., is a former reimbursement manager for Kyphon, and Mr. Bates was formerly a regional sales manager for Kyphon in Birmingham, Ala. The relators will receive a total of approximately $1.1 million as their share of the settlement proceeds.
Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the executive producer and program host of Monitor Mondays.

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