Hospital System Agrees to Settle False Claims Act Case

A press release by the Justice Department announced that Dignity Health (“Dignity”), formerly known as Catholic Healthcare West, has agreed to settle allegations by a whistleblower in a qui tam lawsuit that 13 of its hospitals submitted false claims to Medicare and TRICARE in violation of the False Claims Act.

According to its website, Dignity, headquartered in San Francisco, California, is the largest hospital provider in California and the fifth largest health system in the nation. The whistleblower’s allegations involved 13 of Dignity’s 39 hospitals in California, Arizona, and Nevada.

In 2009, Kathleen Hawkins, a former employee of Dignity, filed a whistleblower lawsuit under the qui tam provisions of the False Claims Act in the Northern District of California. According to the whistleblower, 13 of Dignity’s hospitals knowingly overcharged government healthcare programs, such as Medicare and TRICARE (the military healthcare program), for inpatient admissions when care should have been given on an outpatient basis.

The government claims that from 2006 to 2010, the hospitals submitted claims for inpatient services provided to patients who underwent elective cardiovascular procedures when the procedures should have been submitted as outpatient procedures. In addition, the complaint alleged that four of the hospitals also knowingly overcharged the government for minimally-invasive kyphoplasty procedures used to treat compression fractures by billing them as inpatient, rather than outpatient, procedures.

Dignity will pay $37 million to settle the False Claims Act violation allegations. In addition, Dignity has entered into a five-year corporate integrity agreement with the U.S. Department of Health and Human Services-Office of Inspector General.

The whistleblower will receive approximately $6.25 million of the settlement proceeds as her reward under the qui tam provisions of the False Claims Act.

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