Tacoma Medical Firm to Pay $14.5 Million to Settle Overbilling Allegations

From the U.S. Department of Justice:

Sound Inpatient Physicians Inc. will pay $14.5 million to settle allegations that it overbilled Medicare and other federal health care programs, the Justice Department announced today.  

Sound Physicians is a Tacoma-based provider of hospitalists and other physicians to hospitals and other medical facilities, located at 1123 Pacific Avenue. It employs more than 700 hospitalists and post-acute physicians, who provide services at 70 hospitals and a growing network of post-acute facilities in 22 states.

“Physicians who participate in Medicare and other federal health care programs must document and bill for their services accurately and honestly,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division.  “The Department of Justice is committed to ensuring that Medicare and other federal funds are expended appropriately.”

Today’s settlement addresses allegations that, between 2004 and 2012, Sound Physicians knowingly submitted to federal health benefits programs inflated claims on behalf of its hospitalist employees for higher and more expensive levels of service than were documented by hospitalists in patient medical records.  Hospitalists are physicians, typically trained in internal medicine, who provide care exclusively to hospital inpatients and have no office or outpatient practice. 

“Fraudulently inflated billing of government health care programs puts those programs at risk, and impacts the system’s ability to care for the neediest in our communities,” said Jenny A. Durkan, U.S. Attorney for the Western District of Washington.  “During this time of tight government budgets, we will do all we can to make sure everyone plays by the rules and does not run up the taxpayers’ tab.”

Allegations that Sound Physicians had improperly billed a variety of federal health care programs were brought to the government’s attention through a lawsuit filed by a former Sound Physicians employee, Craig Thomas, under the qui tam, or whistleblower, provisions of the False Claims Act. The act allows private citizens to bring civil actions on behalf of the government and share in any recovery. Thomas will receive $2.7 million of the $14.5 million settlement for exposing Sound Physicians’ inflated claims. 

This civil settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act.  

Since January 2009, the Justice Department has recovered a total of more than $14.7 billion through False Claims Act cases, with more than $10.7 billion of that amount recovered in cases involving fraud against federal health care programs.

The Sound Physicians settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Western District of Washington; the Department of Health and Human Services Office of Inspector General; the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service; the Office of Personnel Management Office of Inspector General; the Department of Veterans’ Affairs Office of Inspector General; and the TRICARE Management Activity Office of General Counsel.

The lawsuit is United States of America ex rel. Craig Thomas v. Sound Inpatient Physicians, Inc. and Robert A. Bessler, Civil Action No. C09-5301RBL (W.D. Wash.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.