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Minnesota Hospitals Pay $2.28 Million to Settle Medicare Fraud Charges Involving Kyphoplasty
Date:5/21/2009

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After the Kyphon settlement, HealthEast Care System conducted a self-audit and determined three hospitals -- HealthEast St. Joseph's Hospital, HealthEast St. John's Hospital and HealthEast Woodwinds Hospital -- had overbilled Medicare for kyphoplasty by $1.45 million, which they paid at the time. That amount will be deducted from the amount owed under the terms of today's settlement.

Kyphoplasty is used to treat certain spinal compression fractures that commonly occur in the thoracic (middle) and lumbar (lower) spine. Patients typically fully recover and can walk in a few hours.

The qui tam lawsuit against the HealthEast hospitals, brought under the False Claims Act, was filed in 2008 in federal district court in Buffalo, New York. The two whistleblowers, Craig Patrick and Chuck Bates, were former Kyphon employees. Patrick, of Hudson, Wis., was a reimbursement manager, and Bates was a regional sales manager in Birmingham, Ala.

The U.S. Attorney's Office (USAO) in Buffalo is leading the government's investigation into Medicare fraud involving billing for kyphoplasty. Those who have been most involved include Assistant U.S. Attorney Robert Trusiak, USAO investigator Peggy McFarland, USAO auditor Theresa Tetlow as well as Cindy Pangallo and Peggy Glynn, who are Department of Health and Human Services special agents.

"They have done a great job recouping money that the Medicare system desperately needs," said Tim McCormack, another Phillips & Cohen attorney who worked on the case.

Phillips & Cohen specializes in representing whistleblowers in qui tam lawsuits. Under the False Claims Act, private individuals can sue companies defrauding the government and recover funds on the government's behalf. Whistleblowers, known as "relators," are entitled to 15 percent to 25 percent of the amount recovered as a result of their qui tam lawsuits when the government joins t
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SOURCE Phillips & Cohen LLP
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