Healthy Pay Day for Two Qui Tam Whistleblowers

Washington, DCA Qui Tam Whistleblower case that has been going on since 2008 continues to recover losses for the government. To that end, an allegedly fraudulent billing practice on the part of a collection of hospitals that cost Medicare millions of dollars in unnecessary spending has come home to roost yet again with the announcement January 4 of an additional $6.3 million in recovered funds by way of a whistleblower lawsuit.

The latest settlement elevates the total amount recovered to $101 million collected from 25 hospitals around the country as well as the former Kyphon Inc.

The US Department of Justice announced the latest settlement early in the New Year.

The qui tam lawsuit was originally brought by two former employees of Kyphon Inc., which is now known as Medtronic Spine LLC. The allegation is that kyphoplasty, a type of back surgery that in most cases can be safely performed as an outpatient procedure, was costing Medicaid (and hence the federal government) millions of dollars extra after hospitals routinely kept patients overnight.

Attorneys representing the government whistleblowers alleged that retaining kyphoplasty patients overnight was self-serving and benefited the hospitals financially, but carried no benefit for the patient. In most cases, according to the Justice Department release, a typical kyphoplasty patient is up and walking within a few hours of the procedure.

It was noted that Kyphon sold equipment and materials used to perform the procedures to hospitals and advised the institutions on billing practices for kyphoplasty. Lawyers for the federal whistleblowers noted that costs associated with outpatient care are much lower than the financial impact to Medicare of keeping a patient in hospital overnight.

Seven hospitals located in Alabama, Florida, Mississippi, North Carolina, South Carolina and Texas, bring to 25 the number of hospitals involved in the alleged defrauding of Medicare in this case.

The qui tam lawsuit was initiated by former Kyphon employees Chuck Bates and Craig Patrick in 2008. Filed in federal district court in Buffalo and brought against Kyphon and a number of hospitals, the action not only brings an allegedly improper billing practice to a close, it also suggests a healthy payday for the two plaintiffs under terms of the False Claims Act, the federal whistleblower statute that governs such activity. As plaintiffs, Bates and Patrick are entitled to anywhere between 15 and 25 percent of recovered funds as a reward for bringing the action on behalf of the federal government.

Even at the lowest level of 15 percent split two ways, the two men will net millions each and will join other government whistleblowers in the lineup at the bank…