Dignity Health and its medical group Neurosurgical Associates agreed to pay $10 million to settle allegations that it defrauded Medicare.
Phoenix-based St. Joseph's Hospital, which is operated by Dignity's neurosurgeons, allegedly performed concurrent surgeries even though it billed Medicare for separate procedures. The amended complaint, which a whistleblower filed in an Arizona federal court in 2018, described it as a "bait-and-switch" scheme.
Dr. Bruce Kingsley, the whistleblower who practiced at St. Joseph, alleged that young and inexperienced residents would perform high-risk procedures "with little or no guidance" from a reputable surgeon, contrary to patients' expectations. A reputable "teaching" neurosurgeon would allegedly claim responsibility for multiple surgeries occurring at the same time and fraudulently bill Medicare for them, along with associated hospital admissions. Administrators allegedly falsified records to cover their tracks.
"With every Medicare dollar desperately needed, we simply will not tolerate the submission of false claims to this vital health care program," Timothy DeFrancesca, special agent in charge for HHS' Office of Inspector General, said in prepared remarks. "Working closely with investigative and prosecuting agencies around the country, we will continue to fight for these programs and the people they serve."
Dignity said in a statement that the Justice Department's claims are strictly allegations.
"The settlement by St. Joseph's is not an admission of liability. St. Joseph's remains committed to complying with all CMS regulations," the company said.
Neurosurgical Associates entered into a five-year corporate integrity agreement with the OIG. It must maintain a compliance program, implement a risk assessment program and hire an independent third party to review its Medicare and Medicaid claims.
CommonSpirit Health, which is the result of a merger between Dignity Health and Catholic Health Initiatives, reported $70 million in operating income—excluding COVID-19 relief grants—for the quarter ended Dec. 31, 2020, or a 0.9% margin. That was up from operating income of $40 million in the prior-year period. The health system drew $8.3 billion in revenue in the quarter, which was up 11%.