Three physician practices affiliated with University of Washington Medical Center, Seattle, will pay the largest settlement to date stemming from charges that teaching physicians illegally billed Medicare for procedures performed by medical residents, the U.S. attorney in Seattle is expected to announce today. Not only is the $35 million civil agreement the largest involving such charges, but the case is the first of its kind to result in criminal convictions. In a 1999 lawsuit, a former internal auditor alleged that the groups retroactively billed Medicare and other payers for hundreds of procedures performed by residents, despite having compliance programs intended to detect and prevent fraud. The whistleblower, Mark Erickson, also accused the groups of falsifying documents, destroying evidence and fabricating audit reports. The federal government subsequently joined his suit. Erickson's attorney, Stephen Meagher of Phillips & Cohen, sees a lesson for the hospital industry: "This case demonstrates the vulnerability of compliance programs. Merely having one does not guarantee correct Medicare billing, and (the case) shows you can destroy a compliance program from the inside out."
In settling, the Association of University Physicians, Children's University Medical Group and University of Washington Physicians, which together represent hundred of doctors, did not admit guilt. The groups could not be reached for comment by deadline. Earlier this year, the former chiefs of neurosurgery and nephrology at the medical center were convicted of obstruction and mail fraud, respectively. HHS and the Justice Department have been running a joint investigation into the billing practices of academic physicians since 1996. The federal Physicians at Teaching Hospitals probe and similar cases brought by whistleblowers, such as this latest, have led to settlements with 29 hospitals for a total of more than $160 million. -- by Mark Taylor