$35 million settlement in UW overbilling case

03:43 PM MDT on Friday, April 30, 2004

Associated Press

SEATTLE - The University of Washington agreed to pay $35 million dollars Friday to settle claims it systematically overbilled Medicaid and Medicare and that it destroyed documents to hide the practice, the Justice Department said.

The federal government will get more than $25 million under the settlement and Washington state $2 million, while Mark Erickson, the whistleblower who brought the fraud to light, will receive $7.25 million, according to Erickson's lawyer.

The fraud settlement - the largest against a teaching hospital since the University of Pennsylvania agreed to pay $30 million in 1995 - ends a five-year investigation that won guilty pleas from two prominent doctors. Restitution paid by those two doctors is included in the $35 million total.

Erickson was a compliance officer for UW Physicians and Children's University Medical Group, which handle billings for doctors at UW centers and clinics, when he filed his lawsuit in 1999.

The U.S. Attorney's Office in Seattle and the University of Washington scheduled news conferences Friday to discuss the matter.

The lawsuit, which has been under seal for almost five years, details how the university changed its policies to allow doctors to bill the government for more expensive services than they had performed, said a statement released Friday by the Washington, D.C., law firm of Phillips & Cohen, which represented Erickson.

UW Physicians, a group of doctors, started a compliance program in 1996 to check whether departments were following the government's billing policies and legal requirements.

But the program auditors found rampant errors. Doctors routinely overbilled Medicare and Medicaid, charging for more expensive services than they had performed, the law firm said.

When UW Physicians found out, according to the lawsuit, it hid the practice by changing the compliance policy, making it acceptable to charge for a treatment that was more expensive than the treatment they actually provided.

The physicians group destroyed the old reports, the lawsuit said, and wrote new, sanitized versions, Erickson's lawyer, Stephen Meagher, said Friday.

"The compliance program revealed the fraud, but the physician groups chose to change the internal audit program to hide the millions they stole," Meagher said.

According to a report in The Seattle Times on Friday, university officials have disputed that any audits were deliberately destroyed, saying some were destroyed in the ordinary course of business but that the underlying data were saved in a different record-keeping format. The officials have said no employees tried to hide inflated billings.

Dr. H. Richard Winn, a neurosurgeon and former head of the school's neurology program, pleaded guilty to obstructing the investigation and was ordered to pay $500,000 for overbillings.

Winn was forced to resign as chairman of the UW's neurosurgery department and is now on the faculty at Mount Sinai School of Medicine in New York.

Dr. William G. Couser, a kidney specialist and former president of the American Society of Nephrology, pleaded guilty to submitting a fraudulent bill to a private provider and admitted submitting $100,000 in inflated bills to Medicare, Medicaid and a Defense Department health plan.

Since the suit was filed, the university has spent millions of dollars to bolster compliance programs, creating a new oversight office, hiring more staff and replacing 17 of 22 administrators and staff who oversaw billings.