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Hospitals Accused of Improper Charges

Jan 15, 2003 | AP

The Justice Department has joined whistle-blower lawsuits accusing two hospitals of improperly charging Medicare millions of dollars for procedures involving unproven cardiac devices.

The department said Wednesday that the devices used by Johns Hopkins Hospital of Baltimore and Methodist Hospitals of Memphis, Tenn., between 1986 and 1995 were not eligible for coverage because they were experimental and had not been proven safe and effective by the Food and Drug Administration.

The procedures involved cardiac defibrillators, pacemakers and angioplasty devices, the department said.

"The hospitals are using these devices lawfully," said Justice Department spokesman Charles Miller, "but Medicare does not allow experimental devices to be billed."

The lawsuits were originally filed under the False Claims Act, which permits private citizens to sue on behalf of the government and share in any amount recovered. The government intervened in both cases in August and filed its own complaints in December.

The cases remained under seal until recently, the Justice Department said.

In statements released Wednesday, Johns Hopkins and Methodist Hospitals said they acted properly.

"The patients received the best available care, and the billing to the government was appropriate," Johns Hopkins spokesman Gary Stephenson said.

Methodist Hospitals administrator Cecelia Sawyer said most of the devices involved "were second- and third-generation models of models which the FDA had already approved." All patients signed consent forms to use the devices, she added.

Ray Shepard, an attorney representing Hopkins, said the government's claims stem from a 1986 Medicare instruction, rescinded in 1995, that said the program would not cover devices not approved by the FDA.

Shepard said the policy was issued without proper notice and created a double standard for Medicare patients. "The rest of the population could receive these devices and in most cases have their insurance pay for them; but the policy would have denied Medicare patients state-of-the-art technology," he said.

Federal prosecutors have already reached settlements with 31 hospitals in related lawsuits for a total of $42 million and are completing settlements with several other hospitals, the Justice Department said.

Last week, the Justice Department sued Tenet Healthcare for up to $323 million, accusing the nation's second-largest hospital chain of overcharging Medicare for certain procedures to inflate its revenue.