Health System pays to settle Medicare case

The University of Pennsylvania Health System agreed to pay $12 million to the federal government last week, ending a four-year investigation into Medicare fraud at one of the system's hospitals. The civil lawsuit was filed by an employee at Presbyterian Hospital, who claimed that his job was at stake if he chose not to participate in the scam, involving requests for reimbursements for a program that was not eligible for Medicare funding. The alleged fraud occurred before Penn acquired the hospital in 1995 from the Presbyterian Foundation. Health System officials say they believe the foundation should be responsible for paying for the settlement. "Since the program was established and guidelines instituted prior to our acquisition of Presbyterian, we believe the penalty is largely the responsibility of the Presbyterian Foundation," said Lee Dobkin, deputy general counsel and director of compliance and training for the Health System. "We have formally requested that the foundation contribute to the settlement," Dobkin said, adding that discussions with the Foundation are ongoing. The Presbyterian Foundation refused to comment yesterday. The program, operated at Presbyterian Hospital since 1993, is designed to provide psychiatric treatment to elderly patients requiring regular treatment but not in-patient hospitalization. In addition to the payment, the University has reduced the operations of the program and has put new billing systems in place. Health System officials claim that as soon as they learned of the problem, they notified the government and worked to correct it. The Health System has already repaid a fourth of the $12 million settlement. Plaintiff John Saunders alleged that bills included sessions during which patients attended birthday parties and watched television shows. Assistant U.S. Attorney Margaret Hutchinson, who handled the case, explained that "a partial hospitalization program has very specific eligibility criteria that was not met." UPHS spokeswoman Rebecca Harmon denied all allegations put forth by Saunders and insisted that the Health System proactively contacted the government when it learned of the problem. Under the Federal False Claims Act, whistleblowers such as Saunders are entitled to between 15 percent to 25 percent of the total settlement. Saunders will receive $2 million from the agreement, which is 18 percent of the total $12 million. "My client did the right thing," Saunders' attorney Gaetan Alfano said. "He is pleased that this investigation and settlement has finally concluded." In an unrelated case in 1995, the Hospital of the University of Pennsylvania agreed to pay $30 million to settle claims alleging that certain Medical School faculty members overbilled Medicare for patient care