Whistleblowers Reveal Medicare Fraud in 6 Hospitals

The Department of Justice is to receive a settlement of $8.3M thanks to qui tam whistleblowers. And to show its thanks, per the qui tam provisions of the False Claims Act, the two employees who reported the hospital’s Medicare fraud (called “relators”) will receive up to 15-25% of these recoveries, or approximately $1.4 million.

The whistleblower lawsuit alleges these hospitals based certain healthcare decisions on financial gain rather than medical reasons when treating Medicare patients. This allowed the hospitals to deliberately overcharge the government, through Medicare, for routine, minimally-invasive back surgery.

From 2000 to 2008, according to the whistleblower lawsuit, Medicare patients who went in for kyphoplasty, a kind of spinal surgery to treat certain spinal compression fractures, were unnecessarily kept at the hospital overnight and billed as inpatient to boost the hospitals’ revenues. According to whistleblowers in the government lawsuit, kyphoplasty is a minimally invasive surgery that can safely be performed as an outpatient procedure in most cases. A few hours of successful surgery, patients are capable of walking unassisted. Rather than save taxpayers money, these six hospitals, according to the qui tam lawsuit, profited by thousands of dollars, and U.S. taxpayers bilked by thousands of dollars, each time Medicare was fraudulently billed for what amounts to unnecessary inpatient surgery.

The breakdown of the $8.3 million for fraudulent Medicare billing is as follows:


  • St. Vincent’s East Hospital, Birmingham, AL – $1.46 million
  • St. Vincent’s Birmingham Hospital, Birmingham, AL – $422,748
  • Providence Hospital, Mobile, AL – $381,713
  • Indiana

  • St. Francis Hospital, Beech Grove, IN – $3.16 million
  • Deaconess Hospital, Evansville, IN – $2.11 million
  • St. John’s Hospital System, Anderson, IN – $826,256

These six hospitals represent a second round of hospitals to settle whistleblower charges of fraudulent Medicare billing for kyphoplasty. Previously this year, three hospitals in the St. Paul, Minnesota-area paid a $2.28M to settle the whistleblower allegations. These whistleblowers had their lawsuits pursued against Medtronic Spine LLC, who settled this portion of the qui tam lawsuit for $75 million last year. Medtronic had acquired Kyphon Inc., the seller of kyphoplasty equipment and materials, who promoted the procedure as a moneymaker for hospitals if they billed Medicare for inpatient surgery.

Presently, the Justice Department has 985 qui tam healthcare fraud cases pending, according to a recent news release from one of the architects of the 1986 changes to strenghthen the False Claims Act, Sen. Charles Grassley (R-Iowa). Of these, 200 qui tam cases deal with pricing and marketing of pharmaceuticals while a nearing equal number (205 whistleblower cases) with Defense Department procurement fraud.

In the 2009 fiscal year, whistleblowers brought 65 settlements and judgments under the False Claims Act to help recover more than $2.8 billion in taxpayer dollars.

For more information on qui tam lawsuits, visit the employment law pages of my Nashville, TN law firm (False Claims Whistleblower / Qui Tam lawsuits) or complete our qui tam lawyer query form to speak with one of our employment lawyers.

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