By SDCN Editor
Oroville, CA–Oroville Hospital has agreed to pay $10,250,000, to the federal government and the State of California to resolve allegations that it knowingly submitted false claims to Medicare and Medicaid arising from medically unnecessary inpatient hospital admissions, a kickback and physician self-referral scheme and the use of erroneous diagnosis codes.
The hospital will pay $9,518,954 to the federal government and $731,046 to the State of California.
Federal authorities alleged that Oroville Hospital admitted patients and billed Medicare and Medicaid for more expensive inpatient hospital stays when inpatient care was not medically necessary and observation status or outpatient care was appropriate. They also alleged that the hospital illegally incentivized inpatient admissions by paying financial bonuses to doctors who worked full-time at the hospital and were in a position to influence whether or not patients were admitted to the hospital. The bonuses paid by the hospital took into account the volume or value of admissions by these physicians. They further allegedly submitted claims to Medicare and Medicaid that included false diagnosis codes for systemic inflammatory response syndrome, resulting in excessive reimbursement to the hospital.
“Improperly billing federal health care programs depletes valuable government resources used to provide medical care to millions of Americans,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division. “We will continue to protect these critical programs by pursuing those who knowingly claim reimbursement to which they are not entitled.”
“Physicians should make decisions based on the best interests of their patients, not their own personal financial interests,” said U.S. Attorney Phillip Talbert for the Eastern District of California. “Hospitals engaging in kickback schemes betray the trust placed in them by their communities and distort care decisions that should be untainted by illegal kickbacks. This settlement demonstrates my office’s commitment to preserving the integrity of public healthcare programs and ensuring that the well-being of patients remains paramount.”
In connection with the settlement, Oroville Hospital entered into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG) that requires, among other conditions, the implementation of a risk assessment and internal review process designed to identify and address evolving compliance risks. The CIA also requires an independent review organization to annually assess both the medical necessity and appropriateness of select claims billed to Medicare and policies and systems to track arrangements with some referral sources.
“Health care providers that improperly bill Medicare and Medicaid for medically unnecessary services to boost profits divert taxpayer funding meant to pay for services that enrollees actually need,” said Special Agent in Charge Steven Ryan of HHS-OIG. “And when providers engage in improper financial arrangements, they undermine the integrity of medical decision-making. HHS-OIG, in coordination with our law enforcement partners, will continue to identify and investigate such allegations in order to protect federal health care programs and the Americans who rely on them.”
The settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Cecilia Guardiola. Under those provisions, a private party can file an action on behalf of the federal government and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Cecilia Guardiola v. Oroville Hospital. As part of the resolution, Guardiola will receive approximately $1.7 million from the federal settlement amount.
