Some say Medicare probe is confusing errors with fraud

The Justice Department recently subpoenaed several boxes of University Medical Center's contracts and billing records as part of its nationwide investigation into alleged Medicare fraud.

UMC is one of an estimated 5,000 hospitals being examined. FBI agents seized the records in February. The U.S. Attorney's Office in Las Vegas declined Friday to comment on the ongoing investigation.

The investigation, which began shortly after introduction of the Balanced Budget Act, is using a little-known Civil War law -- the False Claims Act -- to examine Medicare billing records.

The False Claims Act was enacted to prevent selling the same horse twice to the federal government.

In a written statement, UMC stated:

"The Justice Department is painting every Medicare billing error as fraud. In Medicare's massive and complex billing system, inadvertent errors do occur. But it is unfair to view each one as fraud ... To make a mistake is something else entirely ..."

The Justice Department's probe has spawned a lawsuit by the American Hospital Association, the Association of American Medical Colleges, the American Medical Association and 43 other providers. The lawsuit contends that the federal government is treating unintentional billing as fraud.

If fraud is determined, a hospital could be fined from $5,000 to $10,000, plus triple damages for each disputed claim.

The Nevada Association of Hospitals and Health Systems is seeking endorsements from the state's congressional delegation for two bills in the Senate and House of Representatives to amend the False Claims Act. Both SB 2007 and HR 3523 seek to:

* Impose a "de minimus" standard that would result in penalties of no more than the dollar amount of the claim, plus interest instead of triple damages and penalties.

* Establish a "safe harbor" for hospitals that submit false claims based on the advice of a fiscal intermediary.

* Establish a "safe harbor" for hospitals that have adopted a compliance plan.

"What I think they (the Justice Department) ought to be doing is making a distinction between fraud and a billing error," Jeanette Belz, president and chief executive officer of the Nevada Association of Hospitals and Health Systems, said. "We are 100 percent opposed to fraud and abuse, but we agree with the AHA."

So far, Rep. John Ensign, R-Nev., is the only Nevada congressman to endorse HR 3523.

"The Justice Department is going too far," Ensign said. "Honest mistakes should be handled as honest mistakes, and fraud should be fully prosecuted."

Ensign contends that the Justice Department is going beyond the intentions of the Balanced Budget Act, which he said he fully supports.

But Sen. Richard Bryan, D-Nev., said he would be very hesitant to change the Medicare fraud laws. He said the inspector general estimates that 10 percent of Medicare payments are fraudulent.

"If someone perpetrates a fraud, then triple damage is adequate," Bryan said. "I'd be very reluctant to weaken the process."

Bill Hale, chief executive officer at UMC, said the FBI took files dating from 1992 to the present. He said the hospital is cooperating fully with the investigation, and hasn't heard anything from the federal government since the records were turned over.

Hale said all the hospitals in Nevada had been served subpoenas, but Belz said she hadn't heard of anyone else being involved.

Ann Lynch, vice president of community services at Sunrise Hospital, said the Justice Department had not taken any of their records.

However, the state attorney general's Medicaid fraud unit did confiscate nearly 200 boxes of documents and computer records from Sunrise Hospital in April. The investigation coincides with nine other ongoing state Medicaid investigations into Columbia/HCA Health Corp., a hospital chain based in Nashville, Tenn.

Kayla Callas, director of marketing and public relations at St. Rose Dominican Hospital in Henderson, said she knew the Justice Department had been conducting investigations in Las Vegas, but had not contacted St. Rose Dominican Hospital.

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