Following years of a secret government investigation into alleged Medicare fraud by the University of Miami healthcare system, the school and the government last month agreed to a proposed settlement that calls for UM to pay a whopping $22 million.

In 2013, Dr. Jonathan L., the former chief operating officer at the University of Miami Miller School of Medicine, filed a Medicare fraud lawsuit in which he accused UM of “filing false claims with Medicare for unnecessary organ transplant tests and overcharging patients for clinic visits,”  The Miami Herald reported.

An October status report noted the existence of two additional, overlapping whistleblower claims against the University of Miami. Once all parties involved agree to the terms of a proposed resolution that includes all three whistleblowers, the False Claims Act settlement can proceed.

Allegations Against the University of Miami

According to the whistleblower lawsuit, the University of Miami engaged in various schemes to defraud federal government healthcare programs Medicare, Medicaid and Tricare.

The Herald states that UM denies wrongdoing but has agreed to pay civil damages “for overcharging the taxpayer-funded Medicare program for pathology lab services” at Jackson Memorial Hospital. The whistleblower reported that UM labs billed Medicare for thousands of unnecessary pathology tests involving kidney and other organ transplant surgeries.

The “agreement in principle” also calls for the university to pay the Justice Department for imposing a surcharge on patients at UM-affiliated medical offices without notifying them of the actual cost for each visit. The patients were charged an extra hospital-based fee — sometimes hundreds of dollars — for visits to doctors’ offices that were not located on UM hospital campuses. Medicare, which serves the elderly, incurred the surcharge.

In his Medicare fraud lawsuit, the whistleblower, Dr. Jonathan L. said he had firsthand knowledge of the fraudulent activity because he witnessed it. He claimed that the activities were not only known at the highest level of the university’s corporate structure — but “encouraged.”

A medical doctor who was also a professor of pathology at UM’s Miller School of Medicine, Dr. Jonathan L. claimed that in 2013 he was forced to resign by the university’s then-president, Donna Shalala. Dr. Jonathan L. filed his False Claims Act lawsuit the same year.

The complaint alleges that the University of Miami routinely “submitted false and fraudulent claims to the Medicare and Medicaid programs, and it has done so ‘knowingly.’” It also states that the institution’s noncompliance was pointed out on numerous occasions, yet continued to submit claims to federal health programs “with reckless disregard of their truth and accuracy.”

Dr. Jonathan L. cites a long history of purportedly fraudulent conduct spanning from 2007 onward. Specifically, he stated that the University of Miami Department of Surgery billed and received payment for laboratory tests for transplants that were not covered. Pursuant to federal regulations, only hospitals that offer organ transplants are permitted to submit transplant-related bills. The complaint stated that as a result of these fraudulent laboratory practices, the university generated $25.5 million per year for its Department of Surgery.

The suit also cited additional fraudulent schemes, including, “billing for non-covered experimental surgical procedures, non-covered organ transplant laboratory tests and services, medically unnecessary organ transplant laboratory tests, services furnished at non-qualified hospital-based outpatient clinics, services furnished at non-enrolled locations, and compensation to oncologists based on the volume and value of referrals.”

Additionally, the complaint alleged that several prominent doctors and professors at the university were involved in the scheme.

University of Miami attorney Dan Gelbertold disputed the characterization of the allegations, which he told the Herald “have absolutely nothing to do with patient care but mostly derive from disagreements over regulatory interpretation.

“The government has never claimed the University failed to provide excellent care to its patients or that it billed for services it did not provide. All other allegations have been outright abandoned by the government.”

What is Medicare Fraud?

In 2017, it was estimated that improper Medicare payments amounted to $52 billion — with the taxpayer ultimately bearing the burden.

Medicare fraud occurs when a medical provider knowingly deceives a federal healthcare program. This is typically done by submitting fraudulent claims to receive payment which is higher than the provider is entitled to receive.

A provider can also commit Medicare fraud by billing for services that are not permitted by federal health programs, billing for services not rendered, or continuing to bill for rented medical equipment after the patient has returned it.

The University of Miami Medicare Fraud Whistleblower Lawsuit is the United States of America v. University of Miami, Case No. 1:13-cv-22500-CMA in the United States District Court for the Southern District of California.