Presidency of Lyndon B. Johnson

A settlement has been reached in a whistleblower class action lawsuit brought against seven hospitals located in Florida, Mississippi, Texas, South Carolina, North Carolina and Alabama. They are accused of submitting false claims to Medicare.

The settling facilities include the following:

Lakeland Regional Medical Center, Lakeland, Fla. ($1,660,134.49)

The Health Care Authority of Morgan County – City of Decatur dba Decatur General Hospital, Decatur, Ala. ($537,892.88)

St. Dominic-Jackson Memorial Hospital, Jackson, Miss. ($555,949.35)

Seton Medical Center, Austin, Texas ($1,232,955.91)

Greenville Memorial Hospital, Greenville, S.C. ($1,026,764.01)

Presbyterian Orthopaedic Hospital, Charlotte, N.C.($637,872.57)

The Health Care Authority of Lauderdale County and the City of Florence, Ala., dba the Coffee Health Group, fka Eliza Coffee Memorial Hospital ($676,038.00)

The settlements with these facilities follow the settlements that the government reached in May 2009, September 2009, and May 2010 with 18 other hospitals for kyphoplasty-related Medicare claims, as well as the government’s May 2008 settlement with Medtronic Spine LLC, corporate successor to Kyphon Inc. The whistleblowers will receive a total of approximately $1.1 million as their share of the settlement proceeds.

Originally filed in 2008, the United States alleged that these hospitals overcharged Medicare between 2000 and 2008 when performing kyphoplasty, a minimally-invasive procedure used to treat certain spinal fractures that often are due to osteoporosis. In many cases, the procedure can be performed safely as a less costly out-patient procedure, but the government contends that the hospitals performed the procedure on an in-patient basis in order to increase their Medicare billings.

The whistleblowers will receive a $80,000 share of the government's recovery.

This lawsuit was originally filed in May 2008 and stemmed from a 2005 filing of a lawsuit against Kyphon Inc.  The United States' complaint alleged that Rex Healthcare routinely submitted claims to Medicare for a variety of minimally-invasive procedures during the period 2004 through 2007, which the hospital classified as inpatient admissions in order to increase its reimbursement from Medicare, despite the absence of medical necessity justifying the more expensive inpatient admissions. The government also made claims related to a variety of other minimally-invasive procedures that the hospital classified as inpatient admissions in order to increase its reimbursement when less costly outpatient visits would have been appropriate.

A settlement was reached to resolve False Claims Act allegations against Serono Laboratories Inc., EMD Serono Inc., Merck Serono S.A, and Ares Trading S.A. They are accused of paying health care providers to promote or prescribe Rebif, a recombinant interferon injectable that is used to treat relapsing forms of multiple sclerosis. 

Under the terms of the agreemen, the proceeds from the settlement will be split between the federal government and various states, with the United States receiving $34.6 million to resolve the federal claims and the states receiving $9.7 million to settle their respective claims under Medicaid.

Serono is alleged to have made payments to providers for hundreds of speaker training meetings and programs, as well as payments for attending consultant, marketing and advisory board meetings, all at upscale resorts and other locations. Serono’s actions allegedly resulted in the submission of false claims to federal health care programs including Medicare and Medicaid for the payment of Rebif, i.e., claims that were tainted by kickbacks.