Mass. Hospital Corporation Pays Nearly $1M to Settle Medicaid Claims Case

December 15, 2004

Massachusetts Attorney General Tom Reilly and United States Attorney Michael Sullivan announced Wednesday that COLUMBIA HOSPITAL CORPORATION of Massachusetts has paid $960,000 to resolve civil claims that it fraudulently overbilled the state’s Medicaid program by exaggerating the disability levels of dozens of their developmentally disabled clients between 1996 and 1999.

As a result of the settlement, the United States Government and the Commonwealth of Massachusetts will each receive $400,000 for reimbursement to the federal and state Medicaid programs respectively. The remaining $160,000 will go to the whistleblower who triggered the investigation.

In 1998, Reilly’s Medicaid Fraud Control Unit began an investigation into allegations that COLUMBIA’s MetroWest Day Habilitation Program in Ashland had exaggerated the disability levels of dozens of their developmentally disabled clients, which then resulted in higher state Medicaid payments. Investigators reviewed hundreds of records of MetroWest’s clients, and engaged expert consultants to establish the extent of disability of the affected persons. Present and former employees were interviewed and thousands of pages of personnel records and treatment files were obtained and analyzed.

Medicaid rules require that each client is evaluated by the program based on 16 different disabling conditions such as impaired vision, hearing or mobility. For example, MetroWest would allegedly evaluate a client suffering from severe handicaps when actually the evaluation showed only a moderate level of disability. As a result, the daily rate paid for that client by Medicaid was inflated from $57.20 to $77.64, resulting in a $20.44 overpayment for each day of treatment.

In 1999, Tenet MetroWest HealthCare Limited Partnership purchased the program from COLUMBIA, and after learning of the investigation, Tenet voluntarily cooperated. Tenet agreed to revamp its procedures and bring the program into compliance with the Medicaid regulations. Tenet settled with Reilly’s Office and returned $92,254 to the state Medicaid program to compensate for the higher reimbursement it had received before it revised the disability levels.

The investigation was triggered by information supplied by a former employee of the day habilitation program, who later filed whistleblower lawsuits in federal and state court.

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