Judge takes charge in WakeMed settlement

February 6, 2013 

This time, many top officials from WakeMed, the private nonprofit that has served Wake County and many patients from Eastern North Carolina for over 50 years, showed up in Judge Terrence Boyle’s courtroom in downtown Raleigh. Last month, when the judge was to approve a settlement involving the hospital’s overcharging of Medicare, Boyle took note of the absence of WakeMed leaders.

And he delayed his decision on whether an $8 million payment and a deferred prosecution on a potential criminal charge were sufficient.

On Tuesday, WakeMed CEO Bill Atkinson and Tom Oxholm, chairman of the hospital board, were right up front.

Last time out, Boyle was angry on several issues, including whether the public interest had really been served. He also wasn’t happy that the hospital’s performance was not really going to be reviewed by anyone over the two years that a possible criminal prosecution would be deferred. He wondered, with a touch of sarcasm, why the parties even needed him there.

Boyle’s distress seemed to get everyone’s attention. After all, he made it clear last month that he wasn’t crazy about the deal prosecutors had made. And so Tuesday he grilled prosecutor William Gilmore as if he were on a witness stand.

Wrong billing

Basically, WakeMed, a good hospital and a good community citizen, acknowledged that through its heart center, a very big money-maker for the nonprofit, Medicare had been billed for more expensive inpatient stays when patients hadn’t really spent the night. That resulted in overcharges over a period of years. Federal auditors in search of Medicare fraud uncovered the problems. The money, plus penalties – an $8 million total – has been repaid.

Hospital officials, while acknowledging the problem, said it was due to a claim-processing glitch and at one point seemed to blame nurses for ignoring doctors orders. (Some nurses begged to differ.)

And then, when prosecutors and WakeMed lawyers came before Boyle last month expecting their settlement to sail through with his approval, the judge took everybody to the judicial woodshed. He declined to approve the deal and scheduled a follow-up meeting for Tuesday.

Among the things Boyle wanted to know when the parties returned to court was whether any provision had been made for WakeMed to reimburse patients for excessive co-pays or bills. He also wanted to know whether all the “wrongdoing” had been found. In reference to the overpayments, he used the term “stealing” more than once. And in referring to the suggestion that this had all been about a computer problem, he said, “Computer mistakes aren’t a federal crime.”

What motive?

The judge also was perplexed as to why, if no one on the staff personally benefited from the overcharging, there was a motivation for the excessive bills. “Typically,” he said, “the motive is profit. But this is a nonprofit.” He asked whether the mid-level manager who has been cited as responsible had a “Robin Hood situation” and was trying to help the hospital. He wondered why top administrators had no way of knowing what was developing.

WakeMed is a great medical organization, and Boyle previously noted that a criminal prosecution and conviction would put Medicare and Medicaid money in danger and perhaps put WakeMed out of business. That would be catastrophic for lots of people, with those in need of medical care first among them.

At the conclusion of the Tuesday proceedings, the judge again failed to approve the settlement and indicated he would likely have some additions and suggestions of his own (with more oversight seeming the most likely).

Judge Boyle seems to have a very detailed grasp of this case, and that’s good news for patients and potential patients and taxpayers who, after all, ultimately fund Medicare and Medicaid. His apparent intent to monitor the hospital’s performance with regard to billing is unusual in this type of agreement. Most federal judges likely would agree to the deal and be done with it.

Boyle deserves credit for his diligence. And when this is over, a better settlement for all likely will result.

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