A Medical Device Daily

Rotech Healthcare (Houston) has paid $2 million to settle civil charges that it engaged in false or fraudulent conduct in billing Medicare for durable medical equipment, according to the law firm Berg & Androphy, which represented a former executive who filed whistleblower claims against the company.

The settlement resolves claims filed in April 2004 by former company executive Sheila Bell-Messier, of Texarkana, Texas, who alleged that the company suppressed disclosure of billing issues in Texas, Colorado and Louisiana in order to avoid additional penalties related to a previous civil settlement.

In 2002, while in bankruptcy, Rotech settled federal civil claims related to billing issues related to its Montana, Kentucky, Florida and Georgia operations.

According to allegations in Bell-Messier's unsealed qui tam action in U.S. District Court for the Eastern District of Texas, Texarkana division, when she noticed that billing records were not in compliance with her understanding of federal directives she "shut down the billing." Despite internal requests to restart the billing, Bell-Messier refused, and according to the federal complaint, said she "was not going to Medicare prison for Rotech."

Bell-Messier, whose company had been purchased by Rotech in 1995, stayed on with the company and had overseen operations in 12 states.

Of the total settlement, $2 million will go to the federal government, with Bell-Messier receiving 27%, or $540,000. Rotech also has agreed to pay legal fees of $1.2 million to Bell-Messier's legal team.

The federal government did not intervene in the case. In settling Bell-Messier's claims, Rotech denied any wrongdoing.

In other legalities, Saint Joseph's Hospital (Atlanta) engaged in a systematic scheme to inappropriately admit and overcharge thousands of patients, according to the law firm Page Perry, which has filed a second class-action lawsuit against the hospital.

Dorothy Rivard, a former nursing and pharmacy assistant who was hospitalized at Saint Joseph's in October 2007, alleges in the new lawsuit that she was wrongly diagnosed as a stroke victim, injected over her objections with inappropriate medication, and then subjected to two days of "unnecessary and expensive" medical testing.

The lawsuit alleges that Rivard later learned that her medical records contained "a variety of serious mischaracterizations" that apparently were "used to justify the belated length of stay and the battery of medical testing."

According to the complaint, "In order to increase revenues, and thus profitability, [Saint Joseph's] engaged in a widespread and systematic scheme to admit to inpatient status patients who did not otherwise meet inpatient admission criteria and then issue charges and bills for such inpatient services accordingly." The scheme was "well known to [Saint Joseph's] management, administration, staff and contractors, if not also its board of directors. Moreover, [Saint Joseph's] management and administration actively concealed such practices," the lawsuit claims.

In May, former Saint Joseph's patient Steven Lamb, of Snellville, Georgia, alleged in another class-action lawsuit that a carotid artery stent procedure he underwent in 2005 kept him admitted on an "inpatient" basis for two days — about twice as long as was medically necessary and at a more costly rate than an "outpatient visit," which typically is accomplished in hours, not days.

In December 2007, the U.S. Attorney for the Northern District of Georgia reported a qui tam settlement in which Saint Joseph's paid $26 million to settle federal false claims allegations related to thousands of patient stays between 2000 and 2005 that were billed to the federal Medicare program.