To settle Medicare overbilling case, Northern California hospital to pay out more than $10M
Oroville Hospital has agreed to pay more than $10 million to the federal government to settle long-running allegations that the nonprofit medical facility overbilled Medicare and Medicaid while paying kickbacks to doctors, the U.S. Department of Justice and hospital officials said.
The hospital confirmed the settlement, which did not admit wrongdoing, and said it would enter into a “corporate integrity agreement” with regulators. Under the plan, the Butte County hospital will regularly review its claims to Medicare and Medicaid to ensure that treatments are medically necessary and conform to the agencies’ regulations.
The settlement was announced Thursday, ending a case initially filed in 2020 in Sacramento federal court.
“Improperly billing federal health care programs depletes valuable government resources used to provide medical care to millions of Americans,” Brian M. Boynton, head of the Justice Department’s Civil Division, said in a news release. “We will continue to protect these critical programs by pursuing those who knowingly claim reimbursement to which they are not entitled.”
Justice officials alleged that the hospital inappropriately admitted patients who did not need such care, in order to bill at higher rates. It offered bonuses to doctors based in part on the number of admissions that they ordered, and submitted false claims in order to increase reimbursements.
To settle the civil case, the hospital will pay about $9.5 million to the federal government and $700,000 to the state of California, prosecutors said.
The investigation into the hospital was sparked by a complaint filed in 2020 by Cecilia Guardiola — a lawyer, registered nurse and compliance expert — who undertook a review of payments by several hospitals before choosing to file a complaint against Oroville, court documents show. Guardiola will receive a $1.7 million chunk of the settlement proceeds, the Justice Department said.
Oroville Hospital CEO Robert Wentz said in a statement that he believed the hospital would have prevailed had the case gone to trial.
“Had we chosen to contest the allegations, I am confident that, ultimately, the Hospital would have prevailed in a fair trial of the facts,” Wentz said.
In their initial complaint, Guardiola and federal prosecutors alleged that in addition to admitting patients unnecessarily, the hospital added secondary diagnoses for many patients that increased reimbursement rates. They also accused the hospital of overdiagnosing incidents of sepsis, an often deadly systemic infection.
They said the behavior began in 2013 and continued through the claim’s filling date in August 2020.
