Scripps Medical Group to Pay $355,000 Settlement
A La Jolla medical group agreed Thursday to pay the government $355,000 for the part one of its doctors allegedly played in defrauding Medicare. It was the first settlement involving a new federal law to prevent the private sector from overcharging the government for services.
The settlement was signed in U.S. federal court in San Diego between Scripps Clinic and Research Foundation/Scripps Clinic Medical Group and the Center for Law in the Public Interest in Westwood. The center filed the lawsuit last year on behalf of former Scripps ophthalmologist Paul E. Michaelson, who uncovered alleged instances of false Medicare charges by his then-colleague, ophthalmologist Raymond Y. Chan.
It is the first time a resolution to a lawsuit has been reached under the federal False Claims Amendments Act of 1986, which gives whistle-blowers a forum and financial incentives to report overcharges of federal programs, said attorney John Phillips of the Westwood center.
Based on provisions in the law for triple damages and various fines, the original lawsuit sought recovery of between $3.7 million and $6.3 million.
Still pending is a lawsuit against former Scripps ophthalmologist Chan, accused of overcharging the federal Medicare program of more than $300,000 between 1984 and 1986.
The charges stem from allegations that Chan billed Medicare for eye surgery he did not perform and for surgery he did perform but that was unnecessary, Phillips said.
“The settlement is only with the Scripps entities and doesn’t cover Chan,” he said. “We are still pursuing him vigorously. He is the person most directly responsible. . . . Essentially, Scripps is cutting Chan loose.”
Clinic spokesman Andrew Jowers said that in agreeing to the settlement, Scripps does not admit negligence or wrongdoing.
“Basically, we are pleased with the settlement and it shows we have no culpability,” he said.
Chan could not be reached for comment.
As a part of the settlement, the clinic also agreed to create a billing committee to review Medicare claims and hire an internal Medicare billing auditor, Jowers said.
“Scripps faced up to their responsibilities,” Phillips said. “They saw there was a serious problem there and they took the right steps to resolve it.”
Michaelson, who worked with Chan at the Scripps Clinic Medical Group, accused Chan of a number of abuses after randomly examining records for 37 of Chan’s patients and found that he had overcharged Medicare about $47,000, Phillips said.
“It is very painful to turn in a colleague,” Michaelson said through his lawyers. “I thought long and hard before I decided to file this case. I felt I had a moral obligation to stop these abuses and the false claims act gave me a way to do it.”
50 Suits Pending
About 50 lawsuits have been filed nationwide under the False Claims Amendments Act and the majority of the suits are against defense contractors, Phillips said. The law encompasses reports of overcharges in the last 10 years of federal programs, ranging from defense contracts to school lunch programs, from constructions jobs to Medicare.
Under the federal law, whistle-blowers like Michaelson are entitled to a minimum of 15% and a maximum of 25% of any judgment.
Phillips said Michaelson has publicly agreed to donate his recovery money to various charities involved in vision-related programs for the poor and disabled.
“We believe the settlement will send a strong message to physicians and medical institutions across the country,” Phillips said. “People who see abuses committed . . . can take action to see these people are brought to justice. There will be an investigation and it will be resolved.”
U.S. Atty. Robert Bonner in Los Angeles intervened in the lawsuit after reviewing the allegations last year and has helped Phillips in prosecuting the civil case.
