Pa. Hospital Settles False-Billing Suit for $4.2 Million

A suburban Philadelphia hospital has agreed to pay $4.2 million to settle a Medicare billing fraud suit brought by the federal government.

Abington Memorial Hospital, a premier health care facility in Montgomery County, Pa., allegedly fraudulently billed the Medicare program by more than $1 million from 1991 to 1999.

The allegations are contained in a 2003 suit filed against the hospital under the False Claims Act in the U.S. District Court for the Eastern District of Pennsylvania. The action was brought by the U.S. Attorney's Office in Philadelphia. The FCA allows for the imposition of treble damages in cases of government contract fraud.

The complaint notes that after the Pennsylvania Department of Public Welfare discovered the allegedly false billing in a 1994 audit, Abington did nothing to correct its billing procedures or to repay the government.

In late May of this year Abington agreed to settle the action by paying the federal government a total of $4.2 million. The settlement agreement also calls for the hospital to hire a new compliance staff and correct its billing procedures.

"The monetary settlement is significant but perhaps equally important are the steps that have been taken to ensure that the conduct in question doesn't repeat itself," Philadelphia U.S. Attorney Patrick L. Meehan said in a statement. "The new compliance staff will conduct audits annually or more often if deemed necessary to make sure the hospital is operating with the framework of the agreement."

According to the suit, Abington defrauded the Medicare and Medicaid programs on bills for outpatient laboratory testing involving blood chemistry, hematology tests and urinalysis tests.

The fraud included billing under more expensive billing codes than required for fair reimbursement, double billing, billing for medically unnecessary tests and billing for phantom tests, the government says.