Children’s Hospital Agrees to Settle Qui Tam Case

According to the Department of Justice, Children’s Hospital, Children’s National Medical Center, Inc. and its affiliated entities (collectively “CNMC”) have agreed to settle a pending qui tam lawsuit in which the federal government intervened. The entities will pay $12.9 million to settle allegations that they violated the False Claims Act.

According to its website, CNMC is the sole exclusive provider of pediatric care in the Washington D.C. metropolitan area, and the only freestanding children’s hospital between Philadelphia, Pittsburgh, Norfolk, and Atlanta. Reportedly, CNMC is the largest non-government provider of primary care in the District of Columbia, seeing over 35,000 children annually in all of its 30 locations combined. According to CNMC, it performed more than 17,860 surgical procedures, 123,332 radiological examinations, and more than 1 million laboratory tests in calendar year 2013.

In 2014, a former CNMC employee, James Roark Sr., filed a whistleblower complaint under the qui tam provisions of the False Claims Act against CNMC. In his complaint, the whistleblower alleged that CNMC submitted false claims to the Medicaid programs of the Commonwealth of Virginia and the District of Columbia, as well as to the Department of Health and Human Services (“DHHS”). Medicaid is a joint federal and state program that provides free or low-cost health coverage to people with limited income and resources.

Specifically, the whistleblower, and later the federal government, alleged that CNMC knowingly misstated information on cost reports and applications which was then used by DHHS and Medicaid to calculate reimbursement rates. In addition, the government alleged that CNMC intentionally misrepresented its available bed count on its application under the Children’s Hospitals Graduate Medical Education Payment Program (“CHGME”). The CHGME is run by the DHHS’ Health Resources and Services Administration and provides federal funds to freestanding children’s hospitals to help them maintain graduate medical education programs. As a result of the false claims allegedly submitted by CNMC, CNMC received over-payments from the Virginia and District of Columbia Medicaid programs.

CNMC has agreed to pay $12.9 million to settle the allegations that it violated the False Claims Act. The whistleblower will receive approximately $1.89 million as his reward under the qui tam provisions of the False Claims Act.