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Too Much Care? Stepped Up Medical Necessity Fraud Litigation Against Hospitals

First few Article Sentences

The view of fraud prosecution’s new frontier is becoming clearer with the announcement of substantial new enforcement actions and settlements focusing on the hospital’s role in the performance of allegedly unnecessary procedures. These cases should cause providers to take a fresh look at the intersection of risk management, peer review and billing where medical procedures are alleged to have been unnecessary or in excess of the patient’s needs. Hospitals should evaluate how alleged unnecessary services reported through quality assurance channels might create repayment obligations and fraud prosecution risk.

In August, the U.S. Department of Justice (“DOJ”) reported that Peninsula Regional Medical Center of Salisbury, Maryland paid $1.8 million to settle allegations that the hospital knew of, but failed to remediate staff members’ concerns regarding a cardiologist’s improper stent procedures. The physician was criminally prosecuted and convicted in July of six health care fraud offenses involving the heart stents, including falsifying patient records, performing unnecessary operations, and billing private and public insurers for these procedures. The DOJ accused the hospital’s senior medical staff of failing to fully investigate the reports, and therefore, the submission of false claims for the associated procedures. In addition to repaying the amounts billed for the cardiac procedures, the hospital signed a Corporate Integrity Agreement (“CIA”) with the Department of Health and Human Services, Office of the Inspector General (“OIG”), which, notably, requires it to appoint a full-time “physician executive” to police hospital quality of care issues, and a board-certified cardiologist to direct the cath lab.

Robbins, David B.

Anderson, Anastasia

Bennett Bigelow & Leedom, P.S.

Law, Medical Necessity Fraud

October 11, 2011

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