Advertisement

Hospital to Pay Millions in Fraud Case

Share
Times Staff Writer

The Eisenhower Medical Center in Rancho Mirage has agreed to pay $8 million to settle allegations that the hospital fraudulently overbilled Medicare during the 1990s, federal officials said Wednesday. “This was more or less an accounting scheme where costs were manipulated to gain a higher reimbursement from Medicare,” Assistant U.S. Atty. Wendy Weiss said.

The allegations involving the Riverside County desert hospital surfaced in 1998 when a lawsuit was filed by a purported whistle-blower employed by Healthcare Financial Advisors, the hospital’s Newport Beach-based consulting firm assigned to prepare cost reports for insurers.

Mark Razin, the employee, alleged that the hospital overbilled Medicare from 1990 to 1998 by failing to disclose information that would have resulted in reduced Medicare reimbursements.

Advertisement

For example, Weiss alleged, the hospital received the excessive reimbursements by inflating its unused square footage and padding its doctors’ administrative hours. Additionally, the hospital sought reimbursement for costs associated with its adult day care center, a gift store and its off-site clinics, none of which was eligible for Medicare funding, Weiss said.

In the settlement, Eisenhower officials admitted no wrongdoing.

The hospital released a statement Wednesday: “With the help of reimbursement experts advising both parties, Eisenhower Medical Center and the government were able to reach agreement on the amount of the overpayment, and Eisenhower is pleased that the matter was resolved appropriately.”

The case was investigated by the Department of Health and Human Services, the Office of the Inspector General and the Defense Criminal Investigative Service.

The whistle-blower lawsuit alleged that the hospital kept a second, internal version of Medicare cost reports “for booking purposes only,” leading federal investigators to believe that the hospital and its financial consulting firm knew the extra Medicare reimbursements were improper.

Weiss said the Healthcare Financial Advisors officials who allegedly filed the fraudulent reports were no longer with the company. Federal authorities said those officials were not expected to be prosecuted.

The hospital’s chief financial officers have also left their positions.

“It would be extremely difficult to believe someone extensively trained in financial matters and savvy about what goes on in an institution of this size would have no knowledge about this going on,” Weiss said.

Advertisement

“It would be implausible to believe they did not know about the existence of this practice,” she said.

The U.S. attorney’s office reported that Razin’s whistle-blowing case had led to four hospitals paying more than $34 million in settlements, including a $24.5-million settlement paid by New Mexico-based Lovelace Health Systems, and $736,410 by HealthSouth Corp. related to allegations that HealthSouth Bakersfield submitted false Medicare claims in 1992.

Advertisement