DOJ announces $22 million False Claims Act settlement with the University of Miami for provider-based and lab billing issues

On May 10, 2021, the Department of Justice (DOJ) announced a $22 million settlement with the University of Miami (UM) to resolve allegations related to improper billing for off-campus provider-based facilities, medically unnecessary lab tests and submission of false claims for pre-transplant lab testing. The United States also entered into a separate $1.1 million settlement with Jackson Memorial Hospital (JMH) related to the pre-transplant lab testing, which JMH purchased from UM.

The United States alleged that UM engaged in three practices that violated the False Claims Act:

• UM knowingly engaged in improper billing related to its provider-based facilities that had been converted from physician practices to hospital-based locations by failing to give Medicare beneficiaries who visited those provider-based facilities the beneficiary notice of co-insurance liability as required by 42 CFR 413.65(g)(7). The United States further alleged that UM continued to bill these services to Medicare as hospital services despite having been advised by its Medicare Administrative Contractor that UM’s beneficiary notice practices at the hospital-based facilities were deficient. According to one of the whistleblower complaints filed against UM, UM “received numerous patient complaints regarding this practice” and despite those complaints, UM “continue[d] to submit bills for services furnished at off-campus [UM] clinics … without providing the required written notice” and “opted to create a protocol to handle ‘patient issues/complaints’ instead of providing the requisite notice.”
• UM billed federal health care programs for medically unnecessary lab tests for patients who were to receive kidney transplants at the transplant program operated by UM and JMH  because UM’s electronic ordering system automatically generated a pre-set “protocol” of tests to be run for each patient regardless of medical necessity.
• UM caused JMH to submit inflated claims for pre-transplant lab testing performed at the transplant program in violation of related-party regulations. According to the United States, UM controlled JMH’s decision of where to purchase pre-transplant testing, and that JMH purchased the pre-transplant testing from UM at inflated rates in exchange for UM’s surgeons continuing to perform surgeries at JMH.

The case was unsealed in November 2020 when the parties announced an agreement in principle to settle the case but a final settlement was not announced until May 10, 2021. In addition to the $22 million settlement with the DOJ, UM also entered into a five year corporate integrity agreement with the Health and Human Services Office of Inspector General. 

The allegations against UM (and JMH) stem from three separate qui tam (whistleblower) lawsuits filed against the University in 2013 and 2014. The whistleblower lawsuits contained many additional allegations on which the United States did not intervene and take over for purposes of this settlement. Interestingly, one of the whistleblower lawsuits was filed by a direct report of the former Secretary of the Department of Health and Human Services, Donna Shalala, who was the President of UM at the time the alleged conduct took place. That whistleblower was the Chief Operating Officer, Chief Compliance Officer, Vice President of Medical Affairs and a Professor of Pathology at UM and alleged that Shalala forced him to resign his positions at UM in January 2013. The whistleblowers’ share of the settlement amount has not been made public as of the date of this article.

The success of the United States in this case is a good reminder that violations of the provider-based rule can trigger false claims liability for services rendered and billed from the non-compliant provider-based location.