As the result of a four-year federal investigation into an alleged case of Medicare fraud in a program designed by Presbyterian Medical Center, the University of Pennsylvania Health System has agreed to pay more than $12 million and make “reasonable efforts” to identify and reimburse any Medicare beneficiaries who made payments to the program.
The investigation covered the years 1993-1997. Although the Health System did not own Presbyterian when the program was designed and implemented, assistant U.S. attorney Margaret L. Hutchinson said it should have been aware of the problem when it acquired Presbyterian in 1995. “This sends the message that, in this era of mergers and acquisitions, health-care providers need to be mindful of their due diligence,” she added.
The investigation began in 1997 when John J. Saunders, a Health System employee who had worked at Presbyterian, filed a civil lawsuit over the Medicare-funded Partial Hospitalization Program, which was designed to treat mental and emotional disorders in nursing-home patients who were at risk of being moved to psychiatric hospitals. Saunders claimed that program administrators directed the staff to bill Medicare for therapy sessions that included watching television programs and attending birthday parties, even though some patients were too impaired to participate.
After the suit was filed, the Health System voluntarily stopped all billing under the Partial Hospitalization Program, and initiated a self-audit to determine the extent of the problems. By the time the settlement was announced this past August, the Health System had already paid approximately $3 million to the government, and agreed to pay another $9 million, out of which came $2,173,113 to Saunders and his attorney.
Lee Dobkin, Penn’s deputy general counsel of compliance, said that since the program was “established and guidelines instituted prior to our acquisition of Presbyterian, we believe the penalty is largely the responsibility of the Presbyterian Foundation, the former owners of the Presbyterian Medical Center.” The Presbyterian Foundation has declined to comment.
