Hospitals Settle Kyphoplasty False Claims for $34 Million

Fifty-five hospitals in 21 states will pay the government more than $34 million for allegedly cheating Medicare over kyphoplasty procedures.

The Justice Department announced on July 2, 2013, that the hospitals improperly billed Medicare by keeping patients overnight for Medtronic Inc.’s outpatient kyphoplasty spine procedure. Kyphoplasty, according to the government, can be performed safely and effectively as an outpatient procedure without any need for a more costly hospital admission.

“Hospitals that participate in the Medicare program must bill for their services accurately and honestly, ” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice.  “The Department of Justice is committed to ensuring that Medicare funds are expended appropriately, based on the medical needs of patients rather than the desire of medical providers to maximize profits.”

$75 Million Collected So Far

More than 100 hospitals have paid approximately $75 million to resolve allegations that they mischarged Medicare for kyphoplasty procedures. The government previously settled with Medtronic Spine LLC, the corporate successor to Kyphon Inc., for $75 million to settle allegations that the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as inpatient rather than outpatient procedures.

The largest payment of $7.1 million will be paid by 23 hospitals affiliated with the HCA Inc., of Nashville, Tennessee. The single biggest settlement by one hospital was $4.2 million by the Atrium Medical Center in Middletown, Ohio. Five hospitals affiliated with Trinity Health, Livonia, Michigan, have agreed to pay a total of $3.9 million. Four hospitals affiliated with Morton Plant Mease BayCare Health System, Clearwater, Florida, agreed to pay a total of $2.3 million. The rest were for less than $2 million.

Whistleblowers Collect $5.5 Million

All but four of the settling facilities announced on July 2, were named as defendants in a whistleblower lawsuit brought under the False Claims Act. The lawsuit was filed in federal district court in Buffalo, New York, by Craig Patrick and Charles Bates. Patrick is a former reimbursement manager for Kyphon, and Bates was formerly a regional sales manager for Kyphon in Birmingham, Alabama. They will receive a total of approximately $5.5 million from the announced settlements.

Medtronic paid over $4 billion for Kyphon in 2007. The company recently sold over 500 of the kyphoplasty patents to Orthophoenix LLC of Dallas, Texas.

The Justice Department says the agency has used the False Claims Act to recover more than $10.7 billion since January 2009 in cases involving fraud against federal health care programs. The government’s total recoveries in False Claims Act cases since January 2009 are over $14.7 billion.