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Dignity Health hospital system settles whistleblower suit for $37M


The San Francisco-based Dignity Health hospital system has agreed to pay $37 million to settle charges in a whistleblower suit that 13 of its hospitals in California, Nevada and Arizona knowingly submitted false claims to Medicare and Tricare by admitting patients who could have been treated on a less costly outpatient basis, the U.S. Department of Justice said.

Dignity Health said in a statement there is “widespread confusion” about federal standards for approving coverage of patient admissions.

The whistleblower in the case, former Dignity employee Kathleen Hawkins, will receive about $6.25 million of the settlement total, the Department of Justice said Thursday in a statement.

The department charged that between 2006 and 2010, the hospitals billed Medicare and Tricare, which is part of the military health care program, for inpatient care for certain patients who underwent elective cardiovascular procedures, such as implanting stents and pacemakers, in scheduled surgeries when the claims should have been billed as lower-cost outpatient surgeries.

The government also charged that from 2000 through 2008, four of the hospitals billed Medicare for beneficiaries undergoing elective kyphoplasty procedures, which are minimally invasive and performed to treat certain spinal compression fractures that also should have been billed as less costly outpatient procedures.

In addition, the 13 hospitals were charged with admitting patients for certain common medical diagnoses where admissions as an inpatient were medically unnecessary between 2008 through 2010, the department said.

As part of the agreement, Dignity, which was previously known as Catholic Healthcare West, entered into a corporate integrity agreement with the U.S. Department of Health and Human Services' Office of Inspector General that requires the company to engage in significant compliance efforts over the next five years, the department said.

“Charging the government for higher-cost inpatient services that patients do not need wastes the country's vital health care dollars,” said Joyce R. Branda, acting assistant attorney general for the Justice Department's civil division, in the statement. “This department will continue its work to stop abuses of the nation's health care resources and to ensure patients receive the most appropriate care.”

Dignity, which is the fifth-largest hospital system in the nation with 39 hospitals in three states, according to the Department of Justice, said in a statement that because of the confusion about federal standards for approving coverage of patient admissions, “it is often challenging for physicians to ensure their documentation adequately reflects their decision-making in order to comply with complex regulations when making their best medical judgments. Dignity Health is dedicated to providing compassionate, high-quality and affordable health care to the patients and communities we serve.”

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