Legal troubles continue to mount for San Francisco-based Catholic Healthcare West.
Last week, CHW and its six-hospital regional system, Mercy Healthcare Sacramento (Calif.), paid almost $10.3 million to settle a federal whistleblower lawsuit that charged two physician clinics with submitting false claims to federal health insurance programs and California's Medicaid program.
The settlement comes just more than a week after CHW was served with another whistleblower lawsuit that involves the filing of false Medicare claims at its 291-bed St. Joseph's Medical Center, Stockton, Calif.
News of these latest whistleblower actions brings to four the number of such cases 48-hospital CHW has faced. The federal government already has intervened in two other whistleblower lawsuits over alleged Medicare cost-reporting fraud at some of CHW's Sacramento-area hospitals (Feb. 19, p. 12).
CHW admitted no wrongdoing when it settled the lawsuit last week.
Originally filed in 1998 by a former employee, the lawsuit was unsealed May 16 in U.S. District Court in Sacramento with the announcement of the settlement. The case was handled jointly by the U.S. Justice Department, HHS' inspector general's office and the FBI.
The U.S. attorney's office in Sacramento contends CHW and Mercy knew of the fraudulent claims being submitted by the Woodland (Calif.) Clinic Medical Group and the Medical Clinic of Sacramento. The two clinics have about 165 physicians.
"We do acknowledge that mistakes were made," said Jill Dryer, a CHW spokeswoman in Sacramento.
The alleged false billings, which occurred from 1992 to 1999, included nonreimbursable annual physical exams, billing routine referrals as more highly lucrative consultations and exaggerating the complexity of office visits to obtain higher payments.
"We're pleased that Catholic Healthcare West and Mercy have now taken responsibility for the fraudulent billing and coding practices of the two clinics," said Adisa Abudu-Davis, an assistant U.S. attorney. The whistleblower will receive more than $1.8 million.
The government so far has declined to intervene in the latest whistleblower lawsuit.
The lawsuit was originally filed last year in U.S. District Court in Oakland, Calif., by a former business services manager at the hospital, who has since resolved a wrongful termination lawsuit, his lawyers said.
The whistleblower lawsuit contends St. Joseph's and a consulting company improperly billed Medicare for patients covered by Medicare HMOs.
"We believe the case is without merit and defensible," said Jerri Randrup, a CHW spokeswoman.