MERCY HEALTHCARE: DOJ Joins Whistleblower’s Medicare Fraud Suit

The U.S. Department of Justice has joined a whistleblower lawsuit against Mercy Healthcare Sacramento, accusing the system of bilking Medicare for millions of dollars through false claims. Mercy accountant Joseph Kimball, who filed the suit last year, alleges that over the past eight years, the health system "systematically caused false reports to be submitted to Medicare, including numerous false claims for costs that were known not to be allowable." According to Kimball, the Mercy hospitals stole nearly $19 million from the federal program by:

"deliberately failing to disclose government errors in Mercy's favor;
disguising organization costs as capital costs; manipulating the ratio of total hospital days to indigent-patient days;
claiming an entire bond-retirement loss in the same year instead of amortizing the loss over the life of the bonds;
mischaracterizing the nature of its home health operation in order to qualify for overhead reimbursement;
shifting hospice costs to a hospital; and describing unused building space as being used in order to claim depreciation expense."

The DOJ has joined only part of Kimball's suit, but may intervene elsewhere if future investigation "proves promising." Mercy's outside attorney, Douglas Kelly, denied the charges, arguing, "These are disputes over complicated matters of accounting and reimbursement. The cost reports are ... governed by a set of complex, confusing and ever-changing regulations. The law in the area is a moving target." He added, "When we get to the end, Mercy Healthcare Sacramento will be shown to have acted in good faith and it will be apparent what there were no false claims made to the government." Kimball stands to receive 15% to 25% of any monies recovered by the federal government (Walsh, Sacramento Bee, 5/11). 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.