Century Health Services, a home health agency holding company based in Murfreesboro, Tenn., must pay $7.62 million--triple the value of its alleged violations--in a civil whistleblower lawsuit alleging Medicare cost reporting fraud, according to a three-judge panel of the 6th U.S. Circuit Court of Appeals, Cincinnati. The panel was upholding a lower court’s decision. CHS started an employee stock ownership plan in 1993 and submitted Medicare cost reports seeking reimbursement for $2.54 million that it contributed to the plan in 1994 and 1995; it subsequently received $2.54 million from Medicare. However, the government and the whistleblower, who filed the suit in 1996, contend that CHS promptly transferred all but $6,659 of the money into its general fund and did not disclose the overpayment to Medicare. Under the appellate court ruling, providers have a clear legal “duty to disclose” Medicare overpayments rather than simply a moral one. In September 1996, CHS and eight of its 10 home health agencies transferred the bulk of their assets to Integrated Health Services, Sparks, Md. In 1999, Integrated sold CHS to Medshares, Memphis. At deadline, it was unclear what company would be liable for the court-imposed damages.
Court upholds triple damages in fraud case
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