Staten Island University Hospital has agreed to return $88.9 million that prosecutors say it fraudulently obtained from government health insurance programs, one of the largest settlements of such a claim ever paid by a single hospital.
The settlement, which prosecutors announced Monday, represents the third time in a decade that the hospital, which is the borough’s largest, has paid millions of dollars to resolve civil charges that it knowingly overbilled the government for treatment costs. Prosecutors had accused the hospital of conducting a collection of schemes from 1994 to 2005 that spanned many aspects of its operations, including substance abuse detoxification, inpatient psychiatric care, cancer treatment and the number of residents it had in training.
Two of the charges included in the settlement stemmed from separate whistle-blower lawsuits filed by a former doctor at the hospital and the widow of a cancer patient. Dr. Miguel Tirado, a former director of chemical dependency services at the hospital, accused the hospital of fraudulently billing the state Medicaid and the federal Medicare programs for inpatient alcohol and substance abuse detoxification treatment. Investigators determined that from July 1994 through June 2000, the hospital submitted claims for 12 more beds than it was licensed to use, and hid those beds from state inspectors. To settle those charges, the hospital agreed to return $11.8 million to the federal government and $14.8 million to New York State.
The other whistle-blower suit, filed by Elizabeth M. Ryan of Florida, accused the hospital of using the codes of a cancer treatment covered by Medicare to receive payments for treatment to her husband that was not covered. Investigators determined that the hospital used incorrect billing codes in cancer treatment from 1996 through 2004 to Medicare and Tricare, the United States military’s health insurance program. The hospital agreed to return $25 million to the federal government.
The settlement also resolved two other claims that were not yet the subject of lawsuits. Federal prosecutors said that from 1996 to 2003, the hospital had deliberately inflated its count of residents in training, which resulted in the hospital receiving reimbursements for which it wasn’t entitled. The hospital agreed to return $35.7 million.
Finally, the settlement resolved what prosecutors said were wrongful billings to Medicare and Medicaid for treatment of psychiatric patients in unlicensed beds from July 2003 through September 2005. The hospital agreed to repay the federal government nearly $1.5 million to settle that claim.
In 1999, the hospital entered a settlement with Eliot Spitzer, then the attorney general, to repay $45 million to Medicaid and to provide $39 million in free care for indigent patients. Mr. Spitzer had charged that from 1994 through 1998, the hospital provided therapy to developmentally disabled adults in rooms at group homes, but billed the services as outpatient hospital treatments, which Medicaid reimburses at a rate 10 times higher.
In 2005, Mr. Spitzer’s office negotiated a second settlement with the hospital that required it to return $76.5 million to Medicaid. Mr. Spitzer, who accused the hospital of overbilling through part-time community clinics, said at the time that the hospital’s own lawyers had warned its executives to stop, but the illegal billing continued nonetheless.
We had posted twice before on the 2005 settlement (here and here). It turned out that the former executive vice president of the hospital had been hailed as a leader with "gravitas" after he moved to his next job, which he subsequently quickly quit after his connection with the troubles at Staten Island came to light.
This story again reminds us how often the self-proclaimed leaders with "gravitas" of health care organizations are weighed down with other baggage. This is particularly pertinent during the week when the high priests of finance, the most exalted of the exalted leaders of business, have been shown to have foolishly and arrogantly over-reached. The push to break the medical guild and put managers without health care experience into the leadership of health care organizations unfortunately came at a time when such managers were growing up in a culture of greed, arrogance, and self-interest. So while high-paid chiefs of investment banks are brought low, it is time to rethink whom we have put in charge of health care.