The U.S. Department of Justice (the “DOJ”) recently settled whistleblower False Claims Act (“FCA”) allegations against The University of Miami (“UMiami”) for $22 million, which resolves claims from three separate lawsuits related to billing practices at UMiami’s off-campus hospital-based facilities (“Off-Campus Hospital Facilities”) and fraudulent claims for laboratory services.

Allegations were first raised in 2013 through the filing of a whistleblower lawsuit. Two additional whistleblower lawsuits were filed in late 2013 and mid-2014. The DOJ intervened in all three and alleged:

  1. UMiami knowingly engaged in improper billing relating to its Off-Campus Hospital Facilities. Off-Campus Hospital Facilities are required to give notice to Medicare beneficiaries explaining that they would face higher costs when receiving services at Off-Campus Hospital Facilities as opposed to physician offices. Here, UMiami allegedly converted multiple physician offices to Off-Campus Hospital Facilities, and then sought payment at higher rates without providing beneficiaries the required notice, even after being advised by a Medicare Administrative Contractor that its notice practices were deficient.
  2. UMiami billed federal health care programs for medically unnecessary laboratory tests for patients who received kidney transplants at the Miami Transplant Institute (“MTI”), a transplant program jointly operated by UMiami and Jackson Memorial Hospital (“JMH”). Each time a patient sought treatment at MTI, UMiami’s electronic ordering system automatically prompted the ordering of a number of tests for the patient at UMiami’s laboratory and the DOJ alleged that several of these laboratory tests were medically unnecessary and “dictated by financial considerations rather than patient care.”
  3. UMiami caused JMH to submit inflated claims for reimbursement for pre-transplant laboratory testing conducted at MTI and JMH then paid UMiami in excess of fair market value and Medicare allowable costs for those tests billed by JMH. While UMiami could have billed Medicare directly for the tests, the DOJ alleged that UMiami chose not to in an attempt to increase its income from JMH in exchange for UMiami’s surgeons continuing to perform surgeries at JMH. JMH separately settled with the DOJ for $1.1 million.

In addition to the settlement, UMiami also agreed to enter into a five-year corporate integrity agreement with the U.S. Department of Health and Human Services.

The settlement emphasizes the importance of strictly complying with the notice requirements for Off-Campus billing of Medicare patients. The provider-based rules that set the requirement are conditions of payment, and the failure to comply with all technical requirements may result in the disallowance of the claim.  Further, “standing” orders are risky and need to be established carefully based on patient care needs and not financial considerations. Finally, all financial relationships, including between long time institutional “partners,” need to be reviewed for compliance with the Anti-Kickback Statute and the Stark Law.

Photo of Edward S. Kornreich Edward S. Kornreich

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is a recognized authority on the legal, regulatory and business issues related to health care services.

Areas of Concentration

Ed works primarily on health care transactions, regulatory compliance, health care payment and governance…

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is a recognized authority on the legal, regulatory and business issues related to health care services.

Areas of Concentration

Ed works primarily on health care transactions, regulatory compliance, health care payment and governance issues for varied providers (both for-profit and not-for-profit), vendors, GPOs, distributors and entrepreneurs. His approach combines sensitivity to meeting regulatory business goals with a comprehensive and realistic assessment of the health care environment, and he is particularly experienced in dealing with the complex issues related to integrated health care systems.

Industry Experience

After working for the Legal Aid Society, Ed entered private practice, where he helped represent a major public hospital corporation in a series of reimbursement disputes with the state and federal governments, and counseled New York area hospitals and nursing homes on reimbursement and operational issues. Thereafter, Ed served as General Counsel of St. Luke’s-Roosevelt Hospital Center, one of the largest teaching hospitals in New York. After leaving St. Luke’s-Roosevelt Hospital Center, Ed joined Proskauer as a Partner in 1990.

Thought Leadership

Ed frequently writes and lectures on Medicare and Medicaid reimbursement, health care integration, not-for-profit law and corporate governance issues, and the application of federal and state anti-kickback and “Stark” laws to health care transactions.