San Mateo County to pay $6.8-million settlement over hospital billing

San Mateo County will pay $6.8 million to settle an accusation that its county hospital overbilled the federal government and committed Medicare and Medicaid fraud.

The payment, announced last week, was triggered by a whistle-blower lawsuit filed by a former county compliance officer.

The suit, later joined by the U.S. Department of Justice, alleged that the county inflated San Mateo Medical Center’s bed count for nearly a decade in order to receive higher Medicare reimbursements.

San Mateo County Counsel Michael P. Murphy said the bulk of the payment is “returning funds we shouldn’t have received.”

The settlement also includes a penalty.

Although county officials reported the facility had more than 100 acute-care beds, the count included some that “could be made available on very short notice,” Murphy said.

To qualify for higher reimbursements -- intended for hospitals disproportionately burdened with serving the medically needy -- federal regulations required those beds to be immediately usable.

“Our view was that we didn’t feel it was fraud. . . . Our view is that it was a good-faith mistake,” Murphy said, adding that they agreed to settle because county officials believed that a trial could prove risky.

The whistle-blower, Ronald Davis, will receive more than $1 million “as his statutory share of the proceeds,” according to the Justice Department.

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ron.lin@latimes.com