Inflated Cost Reports Cost California Hospital Over $2 Million to Settle False Claims Act Allegations

On April 20, 2007, the Loma Linda Behavioral Medicine Center paid the United States government in excess of $2 million to settle allegations of overbilling from 1992-1996.  The settlementis the result of a lawsuit filed by a whistleblower under the False Claims Act.  The lawsuit was originally filed in 1998 by a former employee of Healthcare Financial Advisors (HFA), a consulting firm that assists hospitals in preparing cost reports that are submitted to insurers.  The lawsuit alleged that Healthcare Financial Advisors prepared for clients two costs reports; one which was inflated and sent to Medicare and another one designed for internal use only, that accurately reflected the amount of reimbursement the hospital should have received from Medicare.  It should be noted that seven defendants thus far have settled the HFA whistleblower lawsuit, paying approximately $55 million to the government. (Jackson Memorial Hospital in Miami, Florida more than $14 million; St. Elizabeth Regional Medical Center in Lincoln, Nebraska more than $4 million, Lovelace Health System, a wholly owned subsidiary of Cigna Corp. based in Albuquerque, New Mexico, paid $24.5 million in 2002; St. Joseph’s Hospital in Houston, Texas, paid the government $1.5 million in 2002; Eisenhower Medical Center, located in Rancho Mirage, Calif., paid $8 million in 2005 and HealthSouth Bakersfield Rehabilitation Hospital in Bakersfield, Calif., paid $740,000 in 2005).

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