Lovelace Health System, Albuquerque, will pay $24.5 million -- the highest single-hospital, Medicare cost-reporting settlement to date, the U.S. attorney's office in Los Angeles said. The civil settlement, which resolves allegations of false cost reports and reopening requests, is the second stemming from a 1998 civil whistleblower lawsuit filed by Mark Razin, a former reimbursement specialist with Healthcare Financial Advisors, Newport Beach, Calif. Lovelace did not admit wrongdoing in the settlement. An estimated 25 to 30 hospitals, all former HFA clients, are rumored to be named in Razin's suit; however, it remains sealed in U.S. District Court in Los Angeles. In a written statement, Lovelace said it cooperated with the government's review. "Additionally, Lovelace has conducted its own internal review of the reports in question and is satisfied that instances of incorrect submissions to Medicare or Medicaid did not involve fraud," the statement said. The integrated system, which includes a 191-bed hospital and a 167,000-member health plan, is being purchased by Ardent Health Services, Nashville, for $235 million in a deal with current owner Cigna Corp., Philadelphia.
HFA was the biggest and best-known "revenue recovery expert," a category of companies that review previously submitted Medicare cost reports for potential oversights. Its clients have included Tenet Healthcare Corp., Santa Barbara, Calif., and HCA, Nashville. HFA is now owned by Certus Corp., and neither company has been charged by the government. Assistant U.S. Attorney Wendy Weiss in Los Angeles said most of the allegations concerned the deliberate shifting of nonreimbursable costs to parts of Lovelace that could obtain higher reimbursement, bad debt claims for which Lovelace lacked proper documentation and double-billing for the work of physician assistants. "HFA aggressively assisted Lovelace in concealing items for which it knew the hospital had been overpaid and assisted the hospital in retaining dollars to which it was not entitled," Weiss said. "Unfortunately, what we are discovering is that these (probes) start out relatively small, and the further we probe the greater damages we find." -- by Mark Taylor