$16 Million Whistleblower Settlement under the False Claims Act by a Hospital System

July 2, 2020

The False Claims Act is a potent tool for whistleblowers to help the government recover funds that were wrongfully billed and footed by the taxpayer.  Whistleblowers are incentivized to come forward with information and the whistleblower in this case received a whistleblower award of nearly $3 million dollars. 

The allegations in this $16 million settlement brought to light through a filing under seal under the False Claims Act  were that the hospital system was overbilling Medicare and Medicaid, thus committing Medicare Fraud and Medicaid Fraud.   Also, there were alleged violations of the Anti-Kickback Statute (AKS) which in short makes it illegal for a non-employee to receive compensation for referrals of patients, or for the institution to pay more than fair market value to compensate for the referral of Medicare Patients and Medicaid Patients. 

The detailed Medicare Fraud and Medicaid Fraud allegations stem from what our whistleblower law firm refers to as “Cadillac’ing.”   “Cadillac’ing” is giving a higher level of services than what is required but still actually providing the services as opposed to upcoding in which the higher level of services are not provided.  The Defendant allegedly fraudulently billed Medicare and Medicaid for inpatient level of care instead of outpatient observational level of care.  The kickback (AKS) violations stem from the acquisition of a cardiology group where payments made were commercially unreasonable and well-above fair market value to allegedly acquire all their Medicare & Medicaid patients.

U.S. Attorney Byung J. “BJay” Pak stated, “Billing the government for unnecessary inpatient services wastes precious government resources and taxpayer dollars.”

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ATLANTA – Piedmont Healthcare, Inc., an Atlanta-based hospital system, has agreed to pay $16 million to settle allegations that it violated the False Claims Act by billing Medicare and Medicaid for procedures at the more expensive inpatient level of care instead of the less costly outpatient or observation level of care. The settlement also resolves allegations that Piedmont paid a commercially unreasonable and above fair market value to acquire Atlanta Cardiology Group in 2007 in violation of the federal Anti-Kickback Statute.

“Billing the government for unnecessary inpatient services wastes precious government resources and taxpayer dollars,” said U.S. Attorney Byung J. “BJay” Pak. “All appropriate action will be taken to ensure that beneficiaries of federal health care programs received services untainted by overcharges and improper financial incentives.”

In a credit to the physicians, the treating physicians initially properly billed at the requisite level, however their medical opinions were overridden by the case managers who allegedly were guided by directives to bill for the more expensive level of care.  The conduct occurred for roughly 4 years. 

This settlement resolves a lawsuit filed in the U.S. District Court for the Northern District of Georgia by a former Piedmont physician under the qui tam or whistleblower provisions of the False Claims Act, which permit private citizens to bring lawsuits on behalf the United States and obtain a portion of the government’s recovery. The whistleblower in this case will receive $2,967,400.

The case is captioned United States and Georgia ex rel. Doe v. Piedmont Healthcare, Inc. et al., 1:16-CV-780. The claims resolved by this settlement are allegations only and there has been no determination of liability.

The whistleblower lawyers at Brown, LLC commend the result here, the hard work of the United States Attorney’s office, the excellent work of the qui tam law firm and the courage of the whistleblower/relator to come forth with these claims.