A group of hospitals formerly owned by OrNda HealthCorp has agreed to pay $850,000 to settle charges that the hospitals, through a billing firm, submitted false claims.
A whistleblower lawsuit alleged that the 42 Southern California hospitals, now owned by Tenet Healthcare Corp., used a "revenue recovery firm" to review hospital bills and identify additional charges from 1990 to 1995.
Tenet, OrNda and the hospitals denied all allegations and did not admit to any wrongdoing as part of the settlement, announced last week by the U.S. attorney's office in Los Angeles.
The revenue recovery firm, known as Comprehensive Auditing Services for Hospitals, or CASH, would bill commercial insurers for the additional charges, the lawsuit alleges.
Some of those commercial insurers provide healthcare coverage to federal employees and to military personnel under the Civilian Health and Medical Program of the Uniformed Services and the Tricare program. CASH did not review Medicare billings.
The lawsuit claims that the hospitals, through CASH, knowingly submitted false claims for services that were either not provided or had already been billed for and paid.
The whistleblower suit was filed in federal court in January 1996 by Michael Vukanovich, a former CASH employee, and Viva Light, an independent auditor.
Under the federal False Claims Act, the whistleblowers could share between 15% and 25% of the settlement amount, or up to $212,000.
The revenue recovery firm was dissolved in 1996.
Santa Barbara, Calif.-based Tenet purchased the OrNda chain in January 1997 and has assumed payment of the settlement. It's the second time Tenet has had to settle fraud allegations against OrNda. Last year, Tenet agreed to pay $12.6 million to settle charges that several OrNda hospitals had paid kickbacks to physicians for patient referrals (July 28, 1997, p. 14).
No separate compliance program is required as part of the OrNda settlement because Tenet already has an extensive corporate compliance program, said Christi Sulzbach, Tenet's associate general counsel and senior vice president for public affairs.
That program was put into place after one of Tenet's predecessor companies, National Medical Enterprises, paid a whopping $379 million fine in 1994 to settle civil and criminal charges of fraud at its psychiatric hospitals.