The U.S. Justice Department announced last week that Rex had joined 25 other hospitals across the country that have settled similar kyphoplasty allegations, bringing the national tally for settlements paid by hospitals in the investigation to $27.9 million.
“Submitting inflated claims—as Rex Healthcare is alleged to have done—drains critically needed dollars from government healthcare programs,” Daniel Levinson, inspector general of the HHS, said in a written statement. “OIG is committed to working closely with our law enforcement partners to pursue and hold accountable entities that defraud Medicare and ultimately U.S. taxpayers.”
The Rex lawsuit, like all of the pending and settled cases involving similar allegations, stems from a False Claims Act lawsuit brought in the U.S. District Court in Buffalo, N.Y., by two former employees of Kyphon, the manufacturer of equipment and supplies for the procedure.
Kyphoplasty is a procedure in which damaged vertebra can be repaired by inflating the crushed bones with a surgical balloon, and then filling in the resulting cracks with cement.
The whistle-blowers alleged that Kyphon, now owned by Medtronic, coached hospitals in how to increase their billings for the minimally invasive procedure by admitting patients to the hospital for one-day stays. The whistle-blowers and government investigators say the procedure can often be performed much more cheaply in an outpatient clinic.
Legally, Rex did not admit liability in settling the case, and prosecutors did not admit that their claims “are not well-founded” by accepting the settlement, court records say.
The settlement says government investigators also turned up other instances of needless one-day hospitalizations not related to kyphoplasty between 2004 and 2007, but the settlement did not stipulate what procedures were involved. Butler declined to comment on what other procedures were involved.