Justice Department Joins Lawsuit Against KPMG
The Department of Justice has joined a "whistle-blower" suit alleging that auditing firm KPMG LLP "defrauded" Medicaid and Medicare when it worked for the Nashville-based hospital chain HCA-The Healthcare Co. in the early 1990s, the Bloomberg News/Atlanta Journal-Constitution reports. From 1990 to 1992, KPMG, formerly KPMG Peat Marwick, prepared annual cost reports that purportedly helped some of HCA's Florida hospitals bilk Medicare and Medicaid. Former HCA reimbursement manager John Schilling filed the suit in Tampa, charging that KPMG "aided and abetted" HCA in "systematically defraud[ing] the United States" of millions of dollars.
According to the lawsuit, unsealed in May 1999, KPMG helped HCA keep a second set of records, known as reserve reports, which included "many exaggerated and unallowable (reimbursement) claims." The lawsuit also alleges that KPMG "participated in a conspiracy to hide the errors that inflated reimbursements." The Justice Department maintains that the reserve reports were intended to "set aside" money to repay the government if unallowable costs were uncovered. KPMG spokesperson George Ledwith said that the company "denies that it engaged in any wrongdoing." Besides the lawsuit against KPMG, the Justice Department also has joined the lawsuit Schilling filed against HCA, which claims the company filed "fraudulent cost reports for its hospitals." HCA in May had agreed to pay $745 million to settle some of the allegations, but not the cost reports, on which lawyers for both sides are still trying to come to a final agreement (Bloomberg News/Atlanta Journal-Constitution, 12/5).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.