California-Based Medical Center to Pay $11.4 Million to Settle False Claims Act Case

California-Based Medical Center to Pay $11.4 Million to Settle False Claims Act Case

False Claims Act cases in the United States have continued to rise, signaling increased commitment from the United States government to crack down on fraudulent companies looking to game the system to their advantage.

The latest in the line of these companies is the San Mateo County Medical Center, which recently agreed to a financial penalty after being found guilty of violating the False Claims Act.

Earlier this month, the United States Department of Justice (DOJ) published a press release announcing that it had settled with the San Mateo County Medical Center and the San Mateo County after they were found to have improperly billed their services to Medicare. In the release, the Justice Department confirmed that both agencies, based in California, were complicit in the act and would now face the law.

Admitting Everyone into the Medical Center

As the press release explained, San Mateo County Medical Center had admitted several patients who didn't need to be in the hospital to receive care. In fact, some of these patients had been admitted and forced to stay in the hospital despite not needing any medical attention. Some of them had social reasons to be in the hospital, while others just had to stay due to a lack of alternative accommodation.

But, none of this mattered to San Mateo County Medical Center or the San Mateo County government. They continued to bill these peoples’ stays to Medicare, causing significant losses to the government in the process. As the DOJ’s press release confirmed, this act went on from Jan. 1, 2013, through Feb. 28, 2017.

As many know, the Medicare system only bills for medical services that are necessary and reasonable for the diagnosis and treatment of an ailment. When the San Mateo County Medical Center billed these patients’ stays on Medicare, they got reimbursed.

In a statement of admission of guilt, Dr. Chester Kunnappilly, the chief executive of San Mateo Medical Center, explained that the facility had admitted elderly people - as well as homeless people and the disabled. Even though many of these people had completed their treatment, the hospital made them stay at its facility so that it would continue getting those Medicare reimbursements.

However, since the patients’ post-medical care needs couldn’t be met in skilled medical care facilities, they weren’t qualified under the Medicare rules. It is unclear how San Mateo County ties into the case, although it is suspected that the government knew about the medical center’s unlawful acts and turned a blind eye.

Felix Levy’s Relentless Pursuit of the Truth

Eventually, the case was reported by Felix Levy, a Director of Resource Management at the center. Felix Levy had filed the case in 2016, but it was amended in 2017 and 2018, respectively.

As the Justice Department explained, Levy performed a one-month utilization review audit on the San Mateo County Medical Center in 2016. There, he found that there was a 65 percent error rate in the medical center’s Medicare claims. In fact, in that month alone, the medical center had billed $484,000 to Medicare. Of those funds, $365,000 was wrongly filed.

Of all the 114 days that the medical center bullied, 67 would have been inappropriately filed if Levy’s audit didn’t occur.

After Levy reported his findings to his supervisor, he was reportedly told to stay away from any further investigations. The supervisor also told him to keep submitting claims, regardless of whether they were filed properly or not. Then, he took the case to the billing manager, who returned the money for the wrong billings to Medicare. However, the money returned was only for the month that Levy had audited.

Levy eventually instituted mandatory holds on Medicare claims, starting from September 2016 - a month after his audit. His supervisors resisted him, and he requested a formal compliance policy with the law after meeting with the medical center’s top brass. But, nothing changed.

Considering all the roadblocks that Levy had to go through, it is easy to see that there was a collaboration to defraud the government on all levels.

Penalties for Their Crimes

The Justice Department confirmed that both parties had agreed to pay a total of $11.4 million to settle the case. Of that money, $5.8 million will be for restitution and interest on the settled amount. Felix will also be getting a sizable sum for his participation.

The case is yet another show of the effectiveness of the False Claims Act. The Act is one of America’s strongest whistleblower protection laws. It posits that people with actionable intel on fraud against the United States Federal Government can get compensation if their intelligence leads to a financial penalty.

Ideally, whistleblowers can get between 15 and 30 percent of the proceeds gotten by the government.

Besides the financial penalty, the San Mateo County Medical Center has agreed to a five-year Corporate Integrity Agreement. This will include oversight and training from the Office of Inspector General of the Department of Health and Human Services.

The medical center has agreed not to seek payment from any patients, and it will also provide documentation to the government for investigating any individuals for possible criminal activities.

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David Kani

David Kani is a Southern California based trial lawyer with a focus on class actions and whistleblower (False Claims Act, SEC and others) cases.

To connect with David: [hidden email] or 714-907-0697.
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