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Feds scrutinize billing at Lutheran Hospital

Thursday, April 28, 2011 - 10:42 am

The U.S. Department of Justice is investigating billing practices of Lutheran Hospital and its parent company, Community Health Systems. The probe has been disclosed in multiple filings that Community Health submitted to the Security and Exchange Commission this month, and it involves a “whistleblower” lawsuit filed against Lutheran by a former employee.

A key part of the investigation appears to hinge on that suit filed in federal court more than two years ago. Friday, Community Health Systems told the SEC that the Justice Department was intervening in that suit. The suit is based on allegations by an employee who had worked in the case management department of Lutheran and was reassigned to another department in 2006. That employee, Nancy Reuille, worked for Lutheran from 1985 until 2008, according to the lawsuit.

The lawsuit says Reuille supervised 10 case managers responsible for the review of “all of the Medicare, Medicaid, private insurance, and self-pay medical records of hospitalized patients on a daily basis.”

Even further, the lawsuit claims that Reuille was familiar with all aspects of patient account auditing and was able to follow a patient's claim “from admission to discharge, noting the correctness of the ‘patient-type' whether inpatient, outpatient or 23-hour observation,” to verify the necessity of medical care and that the bills matched actual services received.

According to the SEC filing, the suit alleges that Lutheran Hospital of Indiana billed the Medicare program for “false 23-hour observation after outpatient surgeries and procedures, and intentional assignment of inpatient status to one-day stays for cases that do not meet Medicare criteria for inpatient intensity of service or severity of illness.”

The suit also claims that attempts to initiate corrective action were met with resistance due to no area being deemed responsible, that “the process at Lutheran Hospital is purposely ‘ineffective,'” and that there was a clear pattern of intentional abuse of the Medicare system.

In an earlier SEC filing, Community Health said that it was served a subpoena April 8 from the office of the inspector general of the U.S. Department of Health and Human Services. That subpoena sought documents from all Community Health hospitals, including Lutheran Hospitals and its affiliated hospitals. The company said the investigation is focused on its emergency-room practices and procedures.

Community Health's filings with the SEC this month say that the lines of investigation being pursued by the federal investigators appear similar to an investigation under way in Texas, related to a lawsuit filed there April 11.

Officials at Lutheran Hospital referred inquiries on the investigation and lawsuit to Community Health, based in Brentwood, Tenn. Phone calls placed to Community Health this morning and Wednesday were not returned.