County Pays Off $12.7-Million Medicare Debt

Ventura County wrote a check for $12.7 million last Friday and paid off the balance of a $15.3-million lawsuit in which the county was accused of submitting false Medicare claims dating back to 1992.

The cash-strapped county, which preferred to pay off the debt immediately and save the half-million-dollar annual interest charges, paid the bill with money borrowed at a lower interest rate.

The situation began after allegations made by Dr. Jerome Lance, a psychiatrist at Ventura County Medical Center, that the county was submitting false Medicare claims.

The county completed a 10-month internal audit and found that 96% of the hospital’s psychiatric billings for 1998 and 88% of the billings for 1997 were in error and should not have been paid by Medicare.

On Nov. 4, 1999, the county agreed to pay the federal government $15.3 million. It used $3.5 million in tobacco settlement funds to pay off the first of five annual installments.

Using the tobacco money helped spur Community Memorial Hospital to launch its initiative that seeks to transfer the remaining $260 million in tobacco settlement funds from the county to seven local private hospitals.

Assistant U.S. Atty. Wendy Weiss, who has handled the case, said she got a call from Assistant Ventura County Counsel Frank Sieh last week saying the county would pay off the entire debt.

Sieh said a major reason for paying it off was to stop paying the steep interest. He said the plan had been proposed in Chief Administrative Officer Harry Hufford’s budget submitted earlier this year.

Supervisor Frank Schillo said it was simply a matter of refinancing a loan at a lower interest rate.

“We can pay that back over five years or sooner,” he said.

For his role in exposing the problem, Lance will get about $2.7 million in the settlement.