UC Agrees to Pay U.S. $22.5 Million

The University of California has agreed to pay $22.5 million to settle allegations that physicians at teaching hospitals at UC Irvine and four other campuses overbilled the government in filing Medicare claims, officials announced Friday.

The U.S. attorney’s office said the payment was to compensate for overcharges for physician services at the medical centers between 1994 and 1998.

The university denied any wrongdoing in the 13-page settlement. UC officials said they agreed to the settlement only to avoid prolonged and costly litigation after spending about $15 million on auditors and defense attorneys during the four-year federal investigation.

“If these audits showed that physicians were ripping off the taxpayers, that would be one thing,” said George Terwilliger, UC’s defense attorney. “But in fact, the audit results showed just the opposite. The level of physician compliance with these vague and difficult regulations was remarkably high.”

The settlement is among the largest under a national crackdown by the U.S. Department of Health and Human Services on teaching hospitals that allegedly billed the government for faculty physicians’ services when medical residents actually did the work.

All told, the department’s office of inspector general has brought in $98.7 million, including $30 million from the University of Pennsylvania’s clinical practices division.

UC’s five medical centers have 30 days to pay the $22.5 million.

UCLA Medical Center--which has struggled of late to remain in the black--owes the largest share, $8.5 million, because it has the greatest volume of Medicare services. Officials there said the financial burden will be spread among 16 clinical departments.

UC Irvine will pay $4.1 million, UC San Diego and UC San Francisco will each pay $3.7 million, and UC Davis will pay $2.5 million. In some cases, the money will come from reserves in the physician practice plans. In others, it will be covered by general operating revenues.

Federal auditors have probed the books of about 40 of the nation’s 125 teaching hospitals. About 20 of those investigations continue, but department officials said they are beginning to wind down the Physicians at Teaching Hospitals initiative.

“Some of them we have to close down because the [legal] guidance wasn’t clear,” said Judy Holtz of the office of inspector general. “Some of them we have not pursued for other reasons.”

The audits have been widely criticized by the nation’s university hospitals, which have seen federal payments and other sources of revenue shrink under belt-tightening to rein in health care costs.

At one point, the Assn. of American Medical Colleges sued the government over the fairness of the audits.

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Times health writer Sharon Bernstein contributed to this story.