No Fraud Found : Clean Bill of Health for Motion Picture Home

A 15-month federal audit has cleared the Motion Picture and Television House and Hospital of allegations that it defrauded the federal Medicare program by submitting misleading cost reports.

“We are closing out our investigation. The allegations are unfounded,” Judith Holtz, spokeswoman for the inspector general’s office of the Department of Health and Human Services, said in a telephone interview from Washington.

Holtz would not detail the accusations but said they alleged fraud. Blue Cross of California, which handles Medicare billing and reimbursement for the hospital, complained after a routine review of the hospital’s books, she said.

“They found something that looked like an irregularity,” Judy Johnson, a hospital spokeswoman, said of the Blue Cross auditors. An attorney familiar with the investigation said auditors had reviewed cost reports that help determine the Medicare reimbursements a hospital receives.

Federal auditors launched their investigation in November, 1986.

The Woodland Hills hospital and retirement home is administered by the Motion Picture and Television Fund, a 66-year-old private charity supported by some of Hollywood’s leading entertainers and executives. The 41-acre facility, dotted with old oaks and gardens, is home to 275 retired actors, directors and technical workers from the entertainment industry.

Holtz said the hospital’s financial operations were unaffected by the investigation. Federal regulators have the power to withhold Medicare funding from health providers under investigation, she said, but usually impose such prohibitions only when large-scale fraud is alleged.

“That was not the case there,” Holtz said.

Damage to Reputation

Still, the facility’s reputation was damaged by the well-publicized investigation, said John M. Pavlik, executive director of the hospital.

“I think surely it’s had an impact,” he said. “I can’t quantify it.”

Charles T. Stiehr Jr., supervisor of the provider audit department at Blue Cross, said he received a letter from the inspector general’s office Monday informing him that the investigation was closed.

Stiehr said the letter indicated that federal auditors found some of the hospital’s Medicare cost reports questionable, although no wrongdoing had occurred. “They were unable to establish an intent by the provider to defraud the Medicare program,” he said.

The federal audit was one of several controversial issues dogging the hospital in recent months.

The most publicized issue involves a $7.5-million lawsuit by a former nursing director who says she was fired nine days after she raised questions about the hospital’s Medicare-billing practices.

Audrey R. O’Donnell charged that the hospital has incorrectly put patients in the acute-care ward to obtain higher Medicare reimbursements. Hospital administrators have admitted some patients have been placed in the acute-care facility for space or staff reasons. But they said that such patients have been billed at the less expensive skilled-nursing rate.

County health officials have supported the facility’s explanation.