Judge agrees to defer prosecution of WakeMed for false Medicare billing

ablythe@newsobserver.comFebruary 9, 2013 

— After sharply questioning a plea deal between federal prosecutors and WakeMed over false Medicare billing, U.S. District Judge Terrence Boyle added conditions to the agreement and signed it Friday.

Nearly a month after his initial questions about the deal, Boyle ordered that WakeMed and the prosecutors provide the court all reports tracking the hospital’s compliance with the $8 million settlement.

Though federal investigators discovered that Medicare had been billed for millions of dollars of pricey overnight stays when patients had been treated and released the same day, Boyle said he agreed to defer prosecution of one of Wake County’s largest private employers because of the potential harm to innocent parties that could result if the hospital were convicted.

“The Court has considered the threat that the provision of essential health care to WakeMed’s patients would be interrupted, and that the needs of the underprivileged in the surrounding area would be drastically and inhumanely curtailed should defendant be forced to close its doors as a result of the instant prosecution,” Boyle said in the order released late Friday.

The order also stated that Boyle might hold a hearing in a year to see whether the arrangement is being well managed.

Under the settlement, prosecutors have agreed to defer prosecution against WakeMed for two years for billing Medicare for millions of dollars of overnight stays when the patients were treated. No individuals have been charged in the case, but hospital officials acknowledged that the government could seek charges against individuals. WakeMed also agreed to pay $8 million, a small portion of which was for the inaccurate billing investigators discovered.

If WakeMed, as a corporation, were convicted of a felony, Boyle pointed out, it could be ineligible for Medicare and Medicaid. Such a conviction, he said, would be a death sentence for the 52-year-old hospital, and prosecutors and hospital officials agreed.

The judge’s decision to monitor the case is “very good,” said Brandon Garrett, a University of Virginia law professor who tracks all corporate deferred-prosecution agreements.

Before Friday’s order, no federal judge had ordered judicial supervision of such plea deals, according to Garrett.

“This approach seems quite sensible,” said Garrett. “I wish it happened routinely.”

Judge speaks up

Boyle’s sharp questions at a hearing in January and at the hearing earlier this week were a rare example of a federal judge challenging the growing practice of deferred-prosecution deals that federal prosecutors cut with misbehaving corporations.

The arrangements, which allow the government to collect fines and appoint outside monitors to impose internal reforms without putting a company through the stigma of a trial, mushroomed in the wake of the Enron scandal. But such accords, experts contend, often keep many details private while forgoing the oversight of a judge sworn to look after the public’s interest.

The order filed Friday came three days after a hearing in a Raleigh federal courtroom where Boyle asked whether all the wrongdoing had been exposed, whether the public would be repaid and if the deal suited the public’s interest.

WakeMed officials declined to discuss the order, other than to express gratitude toward the judge.

Thomas Walker, the U.S. Attorney for the Eastern District of North Carolina, lauded Boyle’s action.

“We are pleased that this settlement was approved,” Walker said in a statement. “It appropriately punishes WakeMed and allows that institution to continue to serve the needs of our community.”

Former executive blamed

The investigation into WakeMed’s billing practices began after a 2007 federal audit hunting for Medicare fraud. The audit showed that WakeMed had the highest rate in North Carolina and the seventh-highest rate in the country of “zero-day stay” billings, or bills to Medicare for inpatient hospital stays that lasted less than a day.

All the cases flagged by investigators were from WakeMed’s heart center, which has long served as the hospital’s big money maker.

WakeMed routinely billed Medicare patients for more expensive inpatient care when doctors’ orders classified them as outpatients. In other cases WakeMed billed them as inpatients without doctors’ orders.

Prosecutors blamed problems on Heidi McAfee, the former director of patient access. McAfee has not responded to requests for comment.

Boyle has a reputation as a demanding, independent judge, pressed the prosecutors on Tuesday about whether the buck stopped with a mid-level manager. Prosecutors told Boyle the investigation was ongoing, but they had no evidence showing otherwise.

The 870-bed hospital system is the largest in Wake County. WakeMed has more than 8,300 employees, making it one of the county’s largest private employers. Nearly a million patient visits were reported in 2012

Blythe: 919-836-4948

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