Hospital Settles Charges of Overbilling (Published 2008) (2024)

Staten Island University Hospital has agreed to return $88.9 million that prosecutors say it fraudulently obtained from government health insurance programs, one of the largest settlements of such a claim ever paid by a single hospital.

The settlement, which prosecutors announced Monday, represents the third time in a decade that the hospital, which is the borough’s largest, has paid millions of dollars to resolve civil charges that it knowingly overbilled the government for treatment costs.

Prosecutors had accused the hospital of conducting a collection of schemes from 1994 to 2005 that spanned many aspects of its operations, including substance abuse detoxification, inpatient psychiatric care, cancer treatment and the number of residents it had in training.

Two of the charges included in the settlement stemmed from separate whistle-blower lawsuits filed by a former doctor at the hospital and the widow of a cancer patient.

Dr. Miguel Tirado, a former director of chemical dependency services at the hospital, accused the hospital of fraudulently billing the state Medicaid and the federal Medicare programs for inpatient alcohol and substance abuse detoxification treatment.

Investigators determined that from July 1994 through June 2000, the hospital submitted claims for 12 more beds than it was licensed to use, and hid those beds from state inspectors. To settle those charges, the hospital agreed to return $11.8 million to the federal government and $14.8 million to New York State.

The other whistle-blower suit, filed by Elizabeth M. Ryan of Florida, accused the hospital of using the codes of a cancer treatment covered by Medicare to receive payments for treatment to her husband that was not covered. Investigators determined that the hospital used incorrect billing codes in cancer treatment from 1996 through 2004 to Medicare and Tricare, the United States military’s health insurance program. The hospital agreed to return $25 million to the federal government.

Dr. Tirado and Mrs. Ryan both sued under the federal False Claims Act; Dr. Tirado also filed under the New York State False Claims Act. Both acts allow individuals to file suits on behalf of the government and receive part of the recovery. Dr. Tirado will receive nearly $5.3 million and Ms. Ryan will receive $3.75 million.

The settlement also resolved two other claims that were not yet the subject of lawsuits. Federal prosecutors said that from 1996 to 2003, the hospital had deliberately inflated its count of residents in training, which resulted in the hospital receiving reimbursem*nts for which it wasn’t entitled. The hospital agreed to return $35.7 million.

Finally, the settlement resolved what prosecutors said were wrongful billings to Medicare and Medicaid for treatment of psychiatric patients in unlicensed beds from July 2003 through September 2005. The hospital agreed to repay the federal government nearly $1.5 million to settle that claim.

A hospital spokeswoman, Arleen Ryback, declined to answer questions but released a statement that said the settlement “closes the chapter on several ongoing investigations putting to rest issues that, in most cases, date back nearly a decade.”

“We want to assure our patients and the communities we serve that S.I.U.H. will continue to deliver the same high quality care that has enabled us to win coveted national awards,” the statement said.

The statement said the settlement would not negatively impact the hospital’s finances because it had been setting aside money. In addition, the hospital said that it had voluntarily disclosed errors in its head counts of medical interns and residents, and that it had run its inpatient psychiatric unit above capacity.

In 1999, the hospital entered a settlement with Eliot Spitzer, then the attorney general, to repay $45 million to Medicaid and to provide $39 million in free care for indigent patients. Mr. Spitzer had charged that from 1994 through 1998, the hospital provided therapy to developmentally disabled adults in rooms at group homes, but billed the services as outpatient hospital treatments, which Medicaid reimburses at a rate 10 times higher.

In 2005, Mr. Spitzer’s office negotiated a second settlement with the hospital that required it to return $76.5 million to Medicaid. Mr. Spitzer, who accused the hospital of overbilling through part-time community clinics, said at the time that the hospital’s own lawyers had warned its executives to stop, but the illegal billing continued nonetheless.

No criminal charges have been filed in any of the actions. In 2005, Mr. Spitzer said he chose not to pursue criminal charges against hospital executives because none of them had benefited personally. He added that filing charges against the hospital would “be the end of the institution.”

The settlement announced Monday resolves all existing government claims against the hospital. But Ms. Ryan and federal prosecutors are still seeking civil damages from Dr. Gilbert Lederman, a former director of radiation oncology at the hospital. Dr. Lederman is accused of fraudulently billing Medicare and Tricare for the treatment that Ms. Ryan’s husband and hundreds of other patients received.

In January, the hospital, Dr. Lederman and another physician agreed to pay $880,000 to the estate of Ms. Ryan’s husband to settle a federal suit that centered on advertisem*nts of the treatment, stereotactic body radiosurgery. The suit charged that the advertisem*nts had overstated the treatment’s successes, according to court records.

Dr. Lederman has denied wrongdoing.

Prosecutors from the office of Benton J. Campbell, the United States attorney for the Eastern District of New York, and Attorney General Andrew M. Cuomo worked together on the most recent case.

The settlement also required the hospital to enter a corporate integrity agreement with the federal Department of Health and Human Services’ inspector general. The agreement requires the hospital to maintain a compliance program to prevent fraud.

“Settlements such as this demonstrate yet again that submitting fraudulent claims to Medicare and Medicaid artificially raises health care costs and in turn steals from those who depend on these government medical programs,” said Daniel R. Levinson, the inspector general for the agency, which runs the Medicare program.