Duke University Health System to pay $1 million for fraudulent billing

jmurawski@newsobserver.comMarch 21, 2014 

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Thomas Walker

Duke University Health System has agreed to pay $1 million for falsely billing federal and state health insurance programs in a settlement jointly announced Friday by the U.S. attorney and the N.C. attorney general.

The federal investigation was based on evidence supplied by a Duke employee. According to her whistle-blower’s lawsuit, when she raised concerns about Duke’s billing practices, her supervisor set her straight: “There’s a right way, a wrong way and the Duke way.”

Duke, which operates three hospitals in the Triangle, falsely billed and overbilled Medicare, Medicaid and Tricare – federal health insurance programs for the elderly, the poor and for military personnel – for at least six years, federal officials said.

As part of its agreement to pay the fine, Duke did not admit to wrongdoing and instead blamed the inflated billings on “an undetected software problem.” Duke said the $1 million represents a refund of money the health care organization was not entitled to collect.

“We are pleased to have reached a settlement,” Duke said in a statement, “and note that at no point did any of the allegations involve questions about the quality of care provided to patients.”

But according to federal investigators, Duke knowingly defrauded government health care providers for years, despite concerns raised by Duke’s in-house auditor. Investigators based their case on evidence supplied by Leslie Johnson, the former auditor who became a whistle-blower. Johnson accused Duke of retaliating against her for doing her job and resigned from the organization in 2010; she now lives in Westchester County in New York.

“Duke was unjustly enriched by these false claims,” said Thomas Walker, the U.S. attorney for the Eastern District of North Carolina, in a federal lawsuit filed in Raleigh last week. “By virtue of the false claims and false statements … Duke wrongfully obtained Medicare, Medicaid, and Tricare funds to which it was not entitled.”

Walker and N.C. Attorney General Roy Cooper said Duke billed health care agencies at surgeon rates for procedures performed by physician assistants. Among other allegations, Duke also billed for physician assistants being present at coronary bypass surgeries even though the assistants were not in the operating room.

According to the lawsuit, Duke retaliated against Johnson when she continued to express concern to supervisors about Duke’s billing practices. The suit says her supervisor doubled Johnson’s workload, gave her poor performance reviews and urged her to take extended medical leave. When she finally quit, Johnson warned her supervisors that they were playing with a “ticking time bomb.”

The Duke case is the latest in a series of actions against fraud in the health care industry by Walker. His office has a number of active investigations, said spokesman Don Connelly.

In 2012 Walker’s agency reached an $8 million settlement with WakeMed Health and Hospitals for overbilling the Medicare program. Last year, the agency netted guilty pleas from a Belvidere ambulance company that billed wheelchair van service, which is not reimbursable by Medicare, as emergency ambulance transport.

In the Duke matter, Johnson said in her December 2012 suit that after she raised concerns to her supervisors she was reassigned to new jobs several times. Johnson outlined a scheme in which Duke manipulated Medicare, Medicaid and Tricare billing to generate higher reimbursements.

One case of improper billing involved her own daughter, who was treated at Durham Regional Hospital in 2008 for heart palpitations and shortness of breath during her pregnancy. Johnson’s daughter told her that she had been seen by a resident, a doctor still in training, but Johnson later discovered her daughter’s claim was billed as though she had been seen by a doctor, according to her lawsuit.

Duke said it investigated Johnson’s claims and denies it violated the U.S. False Claims Act and the N.C. False Claims Act.

“Duke University Health System has a robust corporate compliance program and is committed to the highest standards of ethics and integrity in all of our interactions with governmental healthcare programs,” Duke said in its statement.

Murawski: 919-829-8932

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