Dignity Healthcare Settles for $37 Million for Over-Charging Patients

Dignity Healthcare has decided to settle allegations of patients having been over-charged rather than fight them in court. Dignity Healthcare, commonly known as Catholic Healthcare West, is one of the largest hospital networks in the US. It has hospitals in Arizona, California and Nevada, with 39 hospitals in total. To date, 13 of the hospitals have been accused of over-billing patients for services that should have been outpatient services or for services that are completely unnecessary.

And to make them sound less “dignified,” the hospital groups have been over-charging patients on government funded medical programs. This means they have been one of the factors in rising taxes to pay for public medical programs such as Medicare and Tricare. Tricare is military healthcare services.

“Charging the government for higher cost inpatient services that patients do not need wastes the country’s vital health care dollars,” said Acting Assistant Attorney Joyce R. Branda for the Justice Department’s Civil Division.

The hospital has agreed to settle out for $37 million in lieu of the ordinance filed by a former employee named Kathleen Hawkins. She filed the ordinance in the US district court for the Northern District of California, and she is set to receive 6.25 million dollars in the settlement herself.

After an investigation by the Justice Department, the government has found a list of three common violations across the accused locations. All of the violations include some form of over-charging by labeling inpatient services when the services are clearly outpatient services.

From 2006 to 2010, patients who underwent cardiovascular procedures such as a inserting a stent or pacemaker, were charged for inpatient time and services, when they are considered outpatient surgeries. Patients were also admitted for the treatment of spinal compression fractures or kyphoplasty procedures. These therapies are minimally invasive and don’t require inpatient treatment. Last but not least, after considerable investigation and questioning, hospitals admitted that they openly admitted patients when it was not medically necessary, and the common medical diagnosis could have been monitored in an observation setting.

Other hospitals would do well to take note of these proceedings. The Justice Department is now on high alert of possible other abuses.

“Hospitals that attempt to boost profits by admitting patients for expensive and unnecessary inpatient hospital stays will be held accountable,” said Special Agent in Charge Ivan Negroni of HHS-OIG’s San Francisco.

(Photo courtesy of David Goehring)