An effort to quash charges that dozens of teaching hospitals defrauded Medicare of millions of dollars for investigational devices is facing a crucial battle.
A civil lawsuit, under seal in the U.S. District Court in Seattle, reportedly accuses hospitals of miscoding procedures and manipulating records to obtain reimbursement for investigational cardiac devices (Aug. 21, 1995, p. 34). At the time, federal policy forbade payment for services involving devices not approved for marketing by the Food and Drug Administration.
The federal government collected seven years of documents from 132 hospitals in 1994 in a related investigation (Feb. 20, 1995, p. 34).
Since then, after intense lobbying by hospitals, Medicare policy has changed to provide coverage for most investigational devices (Sept. 18, 1995, p. 17). The government investigation is said to languish, although a Senate subcommittee may hold hearings on the issue. The unsealing of the whistleblower lawsuit, long delayed, is expected to occur in February.
This week the U.S. District Court in Los Angeles will hear arguments that could be pivotal to the outcome of the hullabaloo. A lawsuit filed by 25 hospitals argues that the old policy barring payment for investigational devices was illegal because it never went through government rulemaking procedures (May 15, 1995, p. 26). A victory would, in effect, protect hospitals from the consequences of fraudulent billing and disable the whistleblower suit.
The Los Angeles court was set on Jan. 22 to consider whether the hospital case should be moved to Seattle and heard in context of the whistleblower suit, said Leonard Homer, an attorney for the hospitals. Transferring jurisdiction would eliminate the hospitals' independent attack on the accusations against them. Lawyers for the whistleblower didn't return telephone calls.
In a preliminary ruling, the Los Angeles court said it didn't have any jurisdiction to hear the case, but it hasn't made a final call on the matter, Homer said.
Meanwhile, the Senate Permanent Subcommittee on Investigations is looking into the controversy and could hold hearings shortly, according to a spokeswoman for Sen. William Roth (R-Del.), who heads the committee.
In Sacramento, Calif., the U.S. attorney, prompted by the federal investigation, is scrutinizing the billing procedures . of Sutter Memorial Hospital and Mercy General Hospital. "We are trying to be as cooperative as possible," a Sutter spokeswoman said. "We're hoping to resolve this shortly." A spokeswoman for Mercy said it complied with the subpoena and believed its operations to be in accord with regulations.