CORPORATE CRIME REPORTER

California Hospital Pays Over $2 Million to Settle False Claims Act Case
21 Corporate Crime Reporter 18, April 25, 2007

The Loma Linda Behavioral Medicine Center has paid the government more than $2 million to settle allegations that it fraudulently overbilled federal health insurance programs.

The settlement resolves allegations made against Loma Linda BMC in a lawsuit filed pursuant to the qui tam provisions of the False Claims Act.

The lawsuit was 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 alleges that HFA helped its hospital clients seek reimbursement for unallowable costs.

The lawsuit alleges that HFA helped clients prepare two cost reports – an inflated one that was submitted to Medicare and a second one, designed for internal use only, that more accurately reflected the amount of reimbursement the hospital should have received.

The alleged overbilling occurred from 1992 through 1996, when Loma Linda BMC submitted cost reports to Medicare and Medi-Cal that sought reimbursement unrelated to patient care at the hospital.

The cost reports sought reimbursement for items such as an employee assistance program which serviced non-hospital employees, outpatient meals and start-up costs on an abandoned project.

HFA prepared and Loma Linda BMC maintained a secret, second set of cost reports, which were labeled "conservative," for the years 1992 through 1996.

Those internal records indicated that HFA and Loma Linda BMC knew that the costs sought on the filed cost reports were unallowable for Medicare reimbursement.

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