A Medicare qui tam lawsuit has ended with a $9.5 million settlement between Renown Health and the U.S Department of Justice.

U.S. Attorney Daniel Bogden announced the settlement at the end of June 2016, after about four years of investigation and litigation.

The original Medicare qui tam lawsuit alleged that Renown had been overbilling the Medicare system by billing for certain outpatient treatments at the much higher inpatient rate.

Whistleblower Cecilia G., the company’s former compliance director, will receive a $1.7 million share of the settlement amount.

Renown Health is a Reno, Nevada-based non-profit healthcare organization that took the place of the former Washoe Health System in 2006. Renown now operates Renown Regional Medical Center, the largest health care network in northern Nevada, generating more than $1 billion in revenue annually.

In 2011, the organization generated $1.7 billion in patient revenue, including from inpatient admissions and emergency room visits at two hospital campuses in the Reno area.

Whistleblower Alleges Overcharging, Double-Billing

In her claim filed in 2012, Cecilia alleged that she had been aware of certain “billing deficiencies” since Renown first hired her in June 2009 as Director of Clinical Documentation.

For example, Cecilia alleged she had found instances of patients being double billed as both inpatient and outpatient. She also allegedly found 579 occurrences of “zero-day stays” – inpatient admissions for patients who were discharged the same day.

In some cases, Renown had submitted claims for inpatient care for patient who had never been actually admitted to the hospital, Cecelia alleged.

At first, Cecilia says, she attributed the apparent overbilling to errors in the company’s outdated computer system. Later, after she was promoted to Compliance Director, she discovered the company had purposely put in place processes that would incorrectly assign inpatient admission.

Cecilia says she brought the discrepancies to her management’s attention over and over, but she was repeatedly rebuffed. Finally, she resigned her position in January 2012. She filed this Medicare qui tam lawsuit six months later.

Despite having to pay the financial penalty, Renown will not be required to admit fault under the settlement. The company continues to deny any wrongdoing and says it chose to settle the Medicare qui tam lawsuit rather than engage in an expensive legal defense.

Filing a Medicare Qui Tam Lawsuit Under the False Claims Act

Cecilia was able to bring this claim under the qui tam provisions of the False Claims Act, a federal law that empowers persons with evidence of Medicare fraud or other fraud against the government to file a whistleblower lawsuit. If successful, the claim will allow the government to recover the improperly claimed funds, plus additional monetary penalties.

Claims under the False Claims Act have been particularly effective in stopping Medicare fraud.

Health care providers have been caught manipulating the Medicare system in several ways, such as billing for unnecessary treatments or for services that were never performed, billing twice for procedures that were performed only once (known as “double-billing”), or changing a diagnosis or treatment code to one that will result in a larger Medicare claim.