Vanderbilt Medical Center settles Medicare fraud Qui Tam case with a $6.5-million deal

August 3, 2017

The Medicare fraud case against Vanderbilt Medical Center (VUMC) filed by three of its former anesthesiologists was settled last week in Nashville, Tenn. VUMC entered a deal agreeing to pay $6.5 million. It thus closes the case that began under seal in 2011 and became public in September 2013.

Lawyer Jason T. Brown, a whistleblower lawyer from the JTB Law Group, welcomed the settlement saying “Cases like this encourage more employees with knowledge of Medicare fraud to come forward and help expose wrongdoings. It leads to everyone winning in the end.”  Although this case was not handled by his firm, The JTB Law Group handles similar cases for whistleblowers nationwide.

VUMC paid the settlement last week and at the same time filed for the court’s dismissal of the case. VUMC’s current annual operating revenue is $3.8 billion, so the penalty was just a pittance compared to its revenue.

Michael Regier, general counsel at VUMC, said VUMC made this decision for business reasons. “I think this really, from the perspective of the medical center, is really a decision to move forward.”

Despite the settlement, VUMC did not admit to its liability and the whistleblowers’ allegations legally remained as allegations. VUMC claims it entered the deal for closure and moving on.  The allegations go back to 2003 when for higher profit the hospital overbooked their medical professionals and then made the residents work on the jobs that the physicians claimed as theirs.  False Claims were then allegedly submitted to the Federal Government for services not really performed by the physician certifying the job.

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As a result, the whistleblowers said it’s been a “common practice” for fellowship trainees to perform the job duties of attending physicians.

Under the False Claims Act (FCA), every instance of a false certification to the government that gets paid exposes the Medicare fraudster to triple damages.

In the VUMC deal, Medicare will receive the biggest chunk of the $6.5 million deal. A portion will go to state agencies and to the whistleblowers as per the False Claims Act.  Whistleblowers in these cases who have the courage to come forward could receive up to 25 percent of the recovery, but more likely 20 percent which is still some $1.3 million dollar award.

The deal also provides for the VUMC to bring in a third-party consultant to assess the structure and effectiveness of its compliance program and the compliance and operating policies in some clinical areas.  The whistleblowers reportedly appreciated this move for transparency.

Stress on checking Medicare fraud

In recent years, the government has increasingly pursued Medicare and Medicaid fraud cases. It was noticeably stepped up under former President Barack Obama but from all indications, the Trump administration is also set to continue the trend. Even as Trump’s budget is proposing to cut the HHS budget by $15 billion, it proposed to increase the budget for the health care fraud and abuse program by $70 million.

“These are substantial sums of money and large awards for unearthing government fraud, prompting the government and whistleblowers to pursue cases of Medicare fraud,” said lawyer Jason T. Brown. Although fraud cases can be complex, costly and time-consuming, the returns are positive for the government. It gets $5 for every $1 it spends on these cases, according to a recent report from the DOJ and U.S. Department of Health and Human Services.

D’Alessio et al v. Vanderbilt University, et al, Case No. 3:11-cv-00467, in the U.S. District Court for the Middle District of Tennessee.