In its third whistleblower settlement since May, Catholic Healthcare West, San Francisco, last week agreed to pay $10.7 million to settle civil charges of healthcare fraud related to the use of investigational medical devices, the U.S. Justice Department announced.
The 48-hospital system allegedly billed federal health programs for surgical procedures using investigational cardiac devices at four of its hospitals. The devices had not won FDA approval at the time the surgeries were performed, between 1987 and 1994, and Medicare rules at the time barred reimbursement for procedures using unapproved devices.
The allegations are part of a U.S. investigation of teaching hospitals' billing for experimental devices that began in the early 1990s. Similar allegations against hospitals nationwide other than CHW facilities have resulted in more than $18 million in settlements.
CHW settled without admitting guilt. Three of the facilities are in California: 402-bed Mercy General Hospital, Sacramento, 245-bed Sequoia Hospital, Redwood City, and 245-bed Seton Medical Center, Daly City. The fourth facility is 514-bed St. Joseph's Hospital and Medical Center, Phoenix. CHW operates in Arizona, California and Nevada.
CHW Senior Counsel Cori MacDonneil said the suit was solely a billing dispute about advanced medical technology.
"The government has not questioned the quality of care provided in our facilities," MacDonneil said. "The dispute centered on unclear program guidance and unclear administration of that guidance. Catholic Healthcare West cooperated with the Justice Department, and we are pleased to put this matter behind us."
In a written statement, acting U.S. Assistant Attorney General Stuart Schiffer said, "The hospitals in this case disregarded clear government coverage limitations in order to bill federal healthcare programs for procedures they knew were nonreimbursable." The allegations stemmed from a whistleblower lawsuit filed by former medical device salesman Kevin Cosens, who will receive $2.15 million of the recovery.
This is the third whistleblower case recently settled by financially troubled CHW, which has launched a major reorganization after losing $878 million on operations in the past four years.