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Dignity Pays $37M for False Medicare Claims

SAN FRANCISCO (CN) - Dignity Health - the nation's fifth-largest hospital chain - will pay the feds $37 million to settle allegations that it submitted false claims to Medicare and TRICARE by admitting patients into the hospital that could have been treated as outpatients, the Justice Department said Thursday.

Based in California, Dignity operates 39 hospitals and until 2012 was an official ministry of the Roman Catholic Church. It remains a nonprofit corporation.

According to U.S. Attorney Melinda Haag, 13 Dignity hospitals knowingly overcharged Medicare and TRICARE for inpatient care given to patients who underwent elective cardiovascular procedures - like stent and pacemaker implantations - that could have been billed as outpatient procedures. The false claims occurred between 2006 and 2012, Haag said.

Additionally, between 2000 and 2008 the hospitals billed other minimally invasive procedures as inpatient, and between 2006 and 2010 admitted patients for common ailments that could have been treated in less costly ways, Haag said.

Former Dignity employee Kathleen Hawkins blew the whistle on the practices, leading to a federal action in 2009. Hawkins will receive about $6.25 million for her role in uncovering the scheme.

Dignity did not admit liability as part of the settlement.

"This settlement demonstrates this office's commitment to protecting our federal health care programs," Haag said. "We will continue to aggressively and appropriately pursue False Claims Act allegations of wrongdoing in the health care industry."

Acting Assistant Attorney General Joyce Branda of the Justice Department's civil division, said overbilling Medicare for expensive procedures when hospitals can use cheaper options wastes taxpayer money.

"Charging the government for higher cost inpatient services that patients do not need wastes the country's vital health care dollars," Branda said. "This department will continue its work to stop abuses of the nation's health care resources and to ensure patients receive the most appropriate care."

In 2012, Dignity took in over $10.5 billion in revenue and employs 55,000 people in California, Nevada and Arizona.

The hospital chain is also the official healthcare provider of the San Francisco Giants baseball team.

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