MERCY HEALTHCARE: Whistle-Blower Suits Raise Questions About Conflict of Interest
Conflicts of interest in two whistle-blower lawsuits facing Mercy Healthcare Sacramento raise questions about the way Medicare billing fraud is prosecuted. One of the suits was brought to the attention of the federal government by Arlan Boyd, a "former [Mercy] consultant-turned-whistle-blower." The second case, involving a greater amount of money, was brought by Joseph Kimball, who still works in Mercy's billing department. The two suits allege that Mercy:
- failed to disclose billing errors;
- claimed organization costs as reimbursable capital costs;
- misallocated home health care funding and then billed Medicare;
- manipulated the reimbursement ratio for indigent patients;
- incorrectly reported the costs of retiring bonds; and
- erroneously claimed depreciation expenses on used building space.
Source of Frustration
Mercy knew since 1993 that it was being overpaid by the Medicare program. According to the company, "it tried to pay the money back." Mercy claimed it "set aside the money it believes it owes the government, plus interest." Mercy had hired Boyd to help remedy the problem, only to have the situation end up "in a whistle-blower suit filed by the consultant who was hired to fix it." The two cases against Mercy highlight "what many in the hospital industry consider a serious conflict of interest." Under the whistle-blower provision of the federal False Claims Act, people have become wealthy by reporting "wrongdoing at their place of business." Critics argue the law has "turned employees and consultants into bounty hunters." In Boyd's $2 million case, he stands to collect between $300,000-$600,000, if successful. In the Kimball case, worth $19 million, Kimball could collect between $2.85 million and $5.7 million. "It's exasperating," Kelly said. Balking at the idea of paying more for damages, he added, "We are ready to pay the government back, but the government will not take it. They believe we should compensate the whistle-blower, pay damages and penalties" (Robertson, Sacramento Business Journal, 5/22).