Southern California Medical Center to Pay U.S. $2.2 Million to Resolve Fraud Allegations

WASHINGTON—The El Centro Regional Medical Center in Imperial County, Calif., has agreed to pay the United States $2.2 million, plus interest, to settle allegations that it defrauded Medicare, the Justice Department announced today.

The government alleges that the 165-bed acute care hospital fraudulently inflated its charges to Medicare patients to obtain larger reimbursements from the federal health care program. The settlement covers claims submitted by the hospital for short inpatient admissions, usually of one day or less, when the services should have been billed on an outpatient “observation” basis or as emergency room visits.

“Hospitals that participate in the Medicare program must bill for their services accurately and honestly,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “We will take action to ensure that taxpayers do not pay the costs of health care providers’ fraudulent practices.”

“Our office will aggressively work with investigative partners to protect healthcare funds from fraud and abuse,” said Laura Duffy, U.S. Attorney for the Southern District of California. “Today’s settlement demonstrates our commitment to holding health care providers who receive federal funds and knowingly defraud or overcharge federal health care programs accountable.”

The allegations arise from a lawsuit that was brought under the qui tam, or whistleblower, provisions of the False Claims Act (FCA), which permit private citizens with knowledge of fraud against the government to bring an action on behalf of the United States and to share in any recovery. The whistleblower in this case, Pietro Ingrande, a former employee of El Centro Regional Medical Center, will receive $375,000 as his share of the recovery.

The United States has agreed to dismiss the lawsuit as a result of the settlement announced today. In addition, as a condition of continued participation in federal health care programs, the Office of Inspector General of the U.S. Department of Health and Human Services (OIG-HHS) has required El Centro Regional Medical Center to enter into a Corporate Integrity Agreement. The agreement subjects the hospital to strict policies and procedures to ensure future compliance with applicable statutes and regulations that govern the use of federal health care funds.

“Whistleblowers are critical to ensuring that Medicare dollars are not siphoned off, but find their way to those who most need them,” said Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the OIG-HHS. “Office of Inspector General special agents and our law enforcement partners have forged a powerful team that will work with private citizens who come forward to protect the Medicare Trust Fund and defend it from fraud and abuse.”

“The Medicare system attempts to deliver much needed medical services to many Americans,” said San Diego FBI Special Agent in Charge Keith Slotter. “Anyone who purposely defrauds the system, therefore, misappropriating its funds, and takes away resources from those who need Medicare’s services will be investigated by the FBI. We are committed to helping preserve the system’s integrity by vigorously pursuing those who attempt to steal the funds that help keep our fellow Americans in good health.”

The investigation and settlement of this case are the result of the collaborative effort of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Southern District of California, OIG-HHS, and the FBI.

This settlement is part of the government’s emphasis on combating health care fraud and another step for the HEAT initiative, which was announced by Attorney General Holder and Secretary Sebelius in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid fraud through enhanced cooperation. One of the most powerful tools in that effort is the FCA, which the Justice Department has used to recover $3.391 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in FCA cases since January 2009 are $4.4691 billion.