A hospital worker in Prescott will take home $1.17 million from a $5.9 million federal government settlement because he blew the whistle on Medicare overpayments.

Yavapai Regional Medical Center in Prescott admitted no wrongdoing, but will pay about $5.9 million to settle a claim the hospital received inflated Medicare payments by misreporting the number of hours its employees worked.

The hospital reported fewer hours than actually worked at the hospital from 2006 through 2009, which made it appear the hourly wages were higher. Those hourly wages determine Medicare’s reimbursement rates, resulting in Medicare overpayments.

Medicare is the federal health program for adults 65 and older.

Yavapai Regional is a health-care system that includes hospitals in Prescott and nearby Prescott Valley.

Medicare Overpayments Indicated Earlier

Hospital employee and whistleblower Gregory Kuzma said he told the hospital’s chief executive officer about the hourly wage reporting mistake in 2011. The CEO told Kuzma the facility would need to investigate that allegation, according to the lawsuit.

The lawsuit says Kuzma received a similar response from the hospital’s chief financial officer in 2012 when Kuzma approached the subject.

Kuzma filed a whistleblower lawsuit in April, claiming that Yavapai Regional underreported the number of hours worked by Prescott hospital employees in 2007 and 2008. The underreporting made the hourly wage appear to be higher, resulting in Medicare overpayments.

In fact, the hospital showed the highest reported wage rates among similar Arizona hospitals, said the lawsuit.

Because the federal government relies on such wage reports to pay Medicare claims, the government overpaid the hospital $15.1 million, according to the lawsuit.

Kuzma’s lawsuit claims the hospital was aware of the Medicare overpayments since it later reported wages correctly.

Court documents claim the federal government reimbursed the hospital more money than it was due from 2011 to 2014 because those payments were based on the wrong hourly wage reports of 2007 and 2008.

Yavapai Regional issued a statement denying it knew of any incorrect reporting any earlier than July 2016.

“As soon as we knew of this allegation on July 20, 2016, we immediately took action and, working collaboratively with the federal government, we were able to quickly reach an agreement in principle to resolve the issue,” said Robbie Nicol, hospital spokesperson. “Neither YRMC nor any of its current or former employees admitted any wrongdoing, nor has the government asked us to do so.”

The statement goes on to say that Medicare patients’ co-pays and deductibles were not affected by the settlement.

Whistleblower Rewards Go to Employee

In addition to receiving $1.17 million of the $5.9 million Medicare overpayment settlement, Kuzma will receive $150,000 from the hospital to cover attorneys’ fees, costs and expenses, according to court documents.

Who Is a Whistleblower?

A whistleblower is any person who offers information regarding wrongdoing to the authorities. The questionable acts are illegal and can be hidden under layers of minutia.

More than 55 federal laws protect or reward whistleblowers, and 44 states plus Washington D.C. provide varying degrees of legal protection.

This act encompasses any person or entity that defrauds the government. Eighty percent of the cases heard involve health care.

However, for whistleblowers disclosing fraud against the government, such as in this Medicare case, a lawsuit must be filed under the False Claims Act with the advice of a specialized attorney in order to be afforded full whistleblower protection and to share in the settlement. R

Reports made to whistleblower hotlines or to other agencies do not qualify for the same protection and award, so it is important to consult with a federal whistleblower attorney before proceeding.