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Carondelet to pay $35 million in rehab overbilling case

Carondelet Health Network, a Tucson, Ariz.-based division of Ascension Health, has agreed to pay $35 million to settle allegations that two of its hospitals inappropriately billed Medicare and other federal health programs for inpatient rehabilitation care.

The settlement is the highest amount paid in Arizona under the False Claims Act, according to the U.S. attorney's office in Phoenix. From 2004 to 2011, the Justice Department alleged, the Carondelet hospitals billed the government for inpatient rehab services for patients who didn't meet coverage criteria.

The Roman Catholic hospital system “expressly denies” the allegations in the settlement agreement.

Carondelet discovered and reported the matter to the government in 2010 and repaid $24 million in 2012. A whistle-blower, however, filed a related lawsuit in 2011 under the qui tam provision of the False Claims Act, and the government chose to continue investigating.

“In 2010, through its own internal review procedures, Carondelet's corporate responsibility program determined that, in some cases, documentation was lacking to fully support billing of inpatient rehabilitation services to federal healthcare programs,” the system said in a statement about the settlement. As a result of the review, the organization implemented new processes and protocols.

The settlement amount, according to the system, was lowered to reflect the organization's previous payment.

Carondelet CEO James Beckmann said in a statement that he “commend(s) our leadership team who reviewed, audited and voluntarily disclosed our past billing discrepancies.”

The whistle-blower who filed the suit was Jacqueline Bloink, who according to a LinkedIn page is a Tucson healthcare fraud and compliance consultant. She will receive nearly $6 million plus attorney fees as part of the settlement.

“Inpatient rehabilitation services are very costly to taxpayers, and it is critical that these federal dollars be reserved only for those qualified patients who need the intense rehabilitation therapy services provided in an inpatient setting,” U.S. Attorney John Leonardo said in a statement.

Ascension Health recently announced plans to transfer part of its ownership in Carondelet into a three-way joint venture with Tenet Healthcare Corp. and Dignity Health.

Tenet, based in Dallas, would hold the majority stake in Carondelet, with Ascension and Dignity as minority partners.

Follow Modern Healthcare on Twitter: @modrnhealthcr

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