Six Indiana and Alabama hospitals have agreed to pay a substantial amount to resolve allegations that they violated the False Claims Act by submitting false claims to Medicare. The Indiana hospitals involved are Deaconess Hospital in Evansville, St. Francis Hospital in Beech Grove and St. John’s Hospital System in Anderson. The Alabama hospitals are Providence Hospital facilities in Mobile and Birmingham, St. Vincent’s Birmingham Hospital and St. Vincent’s East Hospital.

The Department of Justice investigation centered around the hospitals’ conduct in performing kyphoplasty, a minimally-invasive procedure for treating spinal fractures often caused by osteoporosis.
From 2002 to 2008, the health care facilities performed the procedures on an in-patient basis, even though kyphoplasty can be done safely as out-patient surgery. Medicare will not customarily pay for the procedure as inpatient surgery. According to the government, the hospitals’ practice was a form of prohibited “upcoding” by which the providers schemed to bill Medicare for more than they were entitled to.

The government had already reached a settlement with Medtronic Spine LLC (the successor to the developer of the procedure, Kyphon, Inc.) concerning the company’s related practice of counseling heath care providers to perform kyphoplasty on an in-patient basis, despite the established safety of performing the minimally-invasive procedure on an out-patient basis. The False Claims Act suit against the Indiana and Alabama hospitals was filed by two whistleblowers in federal court in New York. Craig Patrick and Charles Bates, former managers with Kyphon, filed the suit against the hospitals under the Qui Tam provisions of the federal statute. The two will receive a handsome amount as their part of the government’s recovery.

For the full story, go to Department of Justice’s press release.