Braintree (Mass.) Hospital has paid a $1.6 million fine to settle charges that it submitted false claims to the Medicare program in 1991.
However, the 169-bed rehabilitation hospital, owned by Continental Medical Systems, says the billing problem wasn't its fault and says it plans to sue the third-party billing company that submitted the claims on behalf of the hospital.
Regardless, the fine is the third-largest civil monetary penalty paid by a hospital accused of false billing since 1984, according to government records compiled by MODERN HEALTHCARE.
The largest-nearly $3.3 million-was paid by Sacred Heart Hospital in Hanford, Calif., in 1991. HealthSpan Health Systems in Minneapolis paid a $3 million false claims fine in 1993.
MODERN HEALTHCARE obtained a copy of the Braintree settlement last week under the federal Freedom of Information Act. It's dated May 26.
The Justice Department and HHS' inspector general's office accused the hospital of submitting false claims to its Medicare fiscal intermediary from Nov. 1, 1991, through Dec. 31, 1991.
The settlement didn't disclose the nature of the claims, but it said the claims were submitted on behalf of the hospital through a third-party billing firm called Healthcare Business Systems of White Plains, N.Y. Efforts to contact the firm were unsuccessful.
According to the settlement documents, the hospital "denies any liability under the False Claims Act...and denies that the hospital participated in any fraudulent or grossly negligent conduct with respect to the submission of such claims." It admitted to no violations of federal law.
That position was echoed by Ernest Broadbent, Braintree's president, and David Nation, senior vice president and general counsel for Continental, the Mechanicsburg, Pa.-based rehabilitation chain that owns Braintree.
Mr. Broadbent said the hospital hired Healthcare Business Systems in 1991 to retroactively bill Medicare for an estimated $500,000 in reimbursable claims for physician services rendered between October 1988 and January 1991. Braintree employs its own salaried physicians, and payments for their services go to the hospital.
After the hospital received $900,000 and notice that it should be expecting as much as $1.8 million more, Braintree voluntarily notified its Medicare fiscal intermediary of a potential billing problem, Mr. Broadbent said.
Mr. Nation said the hospital cooperated with the intermediary, the Justice Department and HHS' inspector general's office in their investigation of the problem and ultimate settlement.
Although the hospital paid a $1.6 million fine, it kept about $600,000 of the original $900,000 it received as legitimate underpayments from Medicare, Mr. Broadbent said.
Mr. Nation said the $1.6 million fine wouldn't have any material effect on Continental's financial situation. In fiscal 1993, which ended June 30, 1993, the company had $901.4 million in net operating revenues.
Braintree, meanwhile, has severed its ties with Healthcare Business Systems and is preparing to file a lawsuit against the company to recover its money.