Duke pays $1 million to settle whistle-blower case

Duke University Health System in Raleigh, N.C., has agreed to pay $1 million to resolve allegations that it fraudulently inflated its Medicare bills by unbundling some cardiac services and billing for physician-assistants' time illegally.

The three-hospital academic medical center did not admit wrongdoing, but did cooperate with investigators after a former revenue-cycle employee filed a whistle-blower lawsuit against the system that included the allegations.

“Healthcare fraud like this wastes tax dollars, harms patients who need care, and drives up medical costs for all of us,” North Carolina Attorney General Roy Cooper said in a written statement. “We're working closely with federal officials to root out this kind of fraud in North Carolina and make wrongdoers pay.”

A statement from Duke officials said that no one at Duke had any intention of violating the law, and that the government healthcare program services implicated in the allegations did not violate anti-fraud laws.

“For settlement purposes only, we have agreed to pay back to the Medicare, Medicaid and TRICARE programs payments received over a six-year period for claims that resulted from an undetected software problem and through possible misapplication of certain technical billing requirements,” the hospital statement said.

Federal prosecutors and Duke officials refused to release copies of the settlement agreement.

Leslie Johnson, a former healthcare bill coder and quality-control auditor for Duke's revenue-cycle subsidiary, Duke Patient Revenue Management Organization, accused the system of violating the federal and North Carolina false claim acts, which make it illegal to intentionally submit inflated bills to government programs. Johnson, who now lives in New York, filed her lawsuit in December 2012 (PDF).

She accused Duke of billing government healthcare programs for the presence of physician assistants during coronary bypass surgeries when medical residents were also present, which is illegal. The system also allegedly billed separately for some cardiac and anesthesiology services that should have been included as part of an overall “bundled” payment.

On March 14, the Justice Department and the state attorney general's office announced they were intervening as plaintiffs (PDF) in the case against Duke and that they expected to have a settlement shortly after they filed an amended complaint. On March 21, both sides filed the paperwork to dismiss of the case.

Duke officials said, “We investigated these issues thoroughly, reviewed them with the appropriate government officials and were able to narrow the areas of concern to those reflected in the government's Amended Complaint.”

Johnson made other allegations, but she agreed to dismiss her entire case as part of the settlement. Justice Department officials didn't announce how much of the Duke settlement would be paid to her.

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