Hospital to Pay $12.9M |to Settle Fraud Claims

WASHINGTON, D.C. (CN) - A pediatric hospital system in the nation's capital will pay $12.9 million to settle charges it has been fraudulently pocketing Medicaid funds it didn't deserve for the past 15 years.

In a complaint filed in April 2014, the U.S. Justice Department amplified claims made by whistleblower James Roark Sr., a former analyst for the Children's National Medical Center, who said the hospital routinely overstated its operating costs in order to secure greater Medicaid funding than it was entitled to receive.

Specifically, Roark claimed the overhead costs in hospital reports filed with Medicare did not match the numbers on Department of Health and Human Services forms, resulting in higher grant payments to the hospital's research division.

"Since [Children's Hospital's] fiscal year 2000 these certified reports total more than 80 submissions. However, these false cost reports began long before [fiscal year] 2000," the complaint says.

The hospital was also accused of underreporting the number of available beds in its Graduate Medical Education Payment Program, a federally funded program assisting grad-level medical residents, in order to boost the ratio of residents to available beds.

Additionally, the hospital's compensation agreements provided the groundwork for doctors to receive illegal "overly lucrative" kickbacks for patient referrals, the complaint said.

Under the terms of the settlement, the U.S. government, District of Columbia and the Commonwealth of Virginia will recoup about $11.1 million, while Roark will receive $1.8 million as per the federal Whistleblower Act.

U.S. District Judge Richard Leon approved the settlement on June 11.

In a statement provided to Courthouse News, the hospital said the settlement was an agreement between it and various government entities, and "the allegations did not involve or have any effect whatsoever on patient care."

"Consistent with our commitment to compliance and transparency, and with the full support of our Board, we actively cooperated with the government to bring the matter to a prompt and responsible resolution," said Dr. Kurt Newman, the hospital's president and chief executive officer. "We move forward with the continued dedication to providing the high quality care that our patients and their families expect and deserve."

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