Whistle-Blower Leads to $35M Carondelet Deal

TUCSON, Ariz. - Resolving civil allegations that its hospitals falsely billed Medicare, the Arizona nonprofit Carondelet Health Network will pay the United States $35 million.

U.S. Attorney John Leonardo called the settlement "the largest-ever False Claims Act recovery in Arizona."

"Inpatient rehabilitation services are very costly to taxpayers, and it is critical that these federal dollars be reserved only for those qualified patients who need the intense rehabilitation therapy services provided in an inpatient setting," Leonardo added in a statement.

Jacqueline Bloink had filed the 2011 action under the whistle-blower provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery obtained.

The complaint alleged that the nonprofit, which does business as Carondelet St. Mary's Hospital and Carondelet St. Joseph's Hospital in Tucson, Ariz., billed Medicare, the Federal Employees Health Benefit Program, and the Arizona Health Care Cost Containment System between April 7, 2004, and Dec. 31, 2011, for inpatient rehabilitation facility services that were not properly reimbursable under applicable coverage criteria because the patients were not appropriate for inpatient rehabilitation facility services.

The United States intervened in the case, which said the false claims caused federal health care programs to pay substantially more than was warranted.

Carondelet disclosed to the government prior to learning about its investigation "that some inpatient rehabilitation overpayments and tendered a substantial repayment," according to an Aug. 18 statement by the Justice Department.

Based on its investigation, however, the United States had concerns "that the disclosure and the repayment Carondelet tendered were not timely, complete, or adequate."

Carondelet's disclosure nevertheless contributed to the government's efforts in resolving the case with the $35 million settlement.

"The settlement is neither an admission of liability by the hospitals, nor is it a concession by the United States that its claims are not well founded," the Justice Department noted.

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