University of Miami Pays $22M to Settle False Claims Act Allegations

false claims file folder

The University of Miami agreed to pay $22 million to resolve allegations that it violated the False Claims Act by engaging in fraudulent billing practices, ordering medically unnecessary laboratory tests, and causing inflated claims to be submitted for reimbursement to federal health care programs.

Fraudulent Billing Practices

The U.S. Department of Justice (DOJ) alleged that the University of Miami knowingly engaged in improper billing relating to its hospital facilities. Medicare regulations allow medical systems to convert physician offices into hospital facilities, as long as they meet certain conditions. Billing as a hospital facility results in higher costs to both the Medicare program and to patients. As a result, hospital facilities are required to provide notice to Medicare beneficiaries that their costs will be higher if they are seen there rather than at a physician office. After converting multiple physician offices to hospital facilities, the University of Miami sought reimbursement from Medicare at the higher rate for those facilities, but it failed to meet the necessary condition of providing notice to impacted patients, according to government allegations. The DOJ further alleged that these practices continued even after the university was advised by a Medicare administrative contractor of the deficiency in its notification practices.

Unnecessary Lab Tests

Together with Jackson Memorial Hospital, the University of Miami operates an organ transplant center called Miami Transplant Institute. According to DOJ allegations, the University of Miami billed federal health care programs for unnecessary lab tests for patients who received kidney transplants at the Miami Transplant Institute. The government claims that every time a kidney transplant patient checked into the Miami Transplant Institute, the University of Miami’s electronic system ordered a standard protocol of tests regardless of whether they were necessary for the particular patient.

Inflated Claims for Reimbursement

Further, the DOJ alleged that the University of Miami caused Jackson Memorial Hospital to submit inflated claims for reimbursement for the pre-transplant lab testing conducted at the Miami Transplant Institute in violation of regulations for related parties. These regulations limit the reimbursement a provider can obtain for tests performed by a related entity to that entity’s actual costs. According to the government, the University of Miami controlled Jackson Memorial Hospital’s decision to purchase lab tests at inflated rates from the University of Miami in exchange for University of Miami surgeons continuing to perform surgeries at the Institute. The DOJ announced a separate $1.1 million settlement with Jackson Memorial Hospital related to the inflated lab testing claims allegations.

Case Originated with Whistleblowers

This case stems from three separate lawsuits that were filed in 2013 and 2014 by whistleblowers under the False Claims Act’s qui tam provision, which allows private citizens to bring lawsuits on behalf of the government and share in any funds recovered. The whistleblowers, who are called relators, will receive a to-be-determined share of the government’s recovery in this case.

The Takeaway

This case provides a cautionary tale for medical systems that, when billing government payers as a hospital facility rather than a physician office, they must meet all conditions, including proper notification of beneficiaries that their costs will be increased. Further, billing for services that are medically unnecessary is a category that has historically attracted the attention of whistleblowers and drawn the ire of government agencies. As Special Agent in Charge Omar Pérez Aybar of the Department of Health and Human Services Office of Inspector General said in the DOJ’s statement announcing the settlement, “Billing the Medicare program and patients by charging for medically unnecessary services will always draw the attention of my office.”

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