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November 03, 2015 Practice Points

Hospitals Will Pay Government $250 Million for Cardiac Device Coverage Violations

Hundreds of hospitals and others were defendants in a federal whistleblower suit brought under the federal False Claims Act.

By Eric W. Shannon

Hundreds of U.S. hospitals will pay an aggregate sum in excess of $250 million related to cardiac devices that were implanted in Medicare patients in violation of Medicare coverage requirements, the Department of Justice (DOJ) announced on October 30, 2015. The settlements encompass 457 hospitals in 43 states where “cardioverter defibrillators” were implanted in Medicare patients too soon after they had suffered a heart attack, or underwent bypass surgery or an angioplasty. The hospitals and others were defendants in a federal whistleblower suit brought under the federal False Claims Act, a law that imposes liability on companies that defraud the U.S. government and which has been increasingly used to police the healthcare industry. The lawsuit was filed in federal district court in the Southern District of Florida by Leatrice Ford Richards, a cardiac nurse, and Thomas Schuhmann, a healthcare reimbursement consultant. The whistleblowers have received more than $38 million from the settlements. 

Medicare sets waiting periods of up to 90 days before implanting the $25,000 defibrillator devices, which deliver mild electric shocks to restore a normal heart rhythm. Clinical trials have shown that the heart often recovers its own rhythm during that time, making the pricey defibrillators unnecessary.

The settlements were the result of a coordinated effort among the U.S. Attorney’s Office of the Southern District of Florida, the Civil Division’s Commercial Litigation Branch and Department of Health and Human Services- Office of Inspector General, Office of Investigations, and Office of Counsel to the Inspector General. The conduct in question occurred between 2003 and 2010.

 “The settlements announced today demonstrate the Department of Justice’s commitment to protect Medicare dollars and federal health benefits,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “Guided by a panel of leading cardiologists and the review of thousands of patients’ charts, the extensive investigation behind the settlements was heavily influenced by evidence-based medicine. In terms of the number of defendants, this is one of the largest whistleblower lawsuits in the United States and represents one of this office’s most significant recoveries to date. Our office will continue to vigilantly protect the Medicare program from potential false billing claims.”

The DOJ has provided a downloadable list of the 70 settlements on its website. The claims resolved by these settlements are allegations only and there has been no determination of liability. Among the large healthcare providers involved, Hospital Corporation of America agreed to pay $15.8 million; Ascension Health settled for $14.9 million.

The Justice Department stated that it continues to investigate additional hospitals.

— Eric W. Shannon, Debevoise & Plimpton, LLP, New York, NY

Copyright © 2015, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).