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RENO, Nev. (AP) — Renown Health is paying $9.5 million to settle allegations of Medicare fraud after its former compliance director-turned whistleblower accused management of encouraging "systemic" overcharging — and sometimes double-billing — of hundreds of patients.
U.S. Attorney Daniel Bogden announced the settlement agreement late Thursday between the Justice Department and the Reno-based operator of Renown Regional Medical Center, the largest hospital and health care network in northern Nevada with more than $1 billion in annual revenue.
Cecilia Guardiola, a registered nurse and law school graduate, said in a federal whistleblower lawsuit filed in 2012 that she began to discover the "billing deficiencies" shortly after Renown hired her as its director of clinical documentation in June 2009.
Guardiola, who is entitled to $1.7 million of the settlement, said she initially tracked the problems to antiquated computer systems that generated false claims, billing outpatient services at more expensive inpatient rates.
Later, after she was promoted to compliance director, she said she discovered profit-driven "internal processes designed to improperly assign inpatient admission."
Over the next two years, she said she repeatedly brought her concerns to management's attention, but was routinely rebuffed and eventually stifled before resigning in January 2012.
"Renown management encouraged, directed and facilitated the continued fraudulent activity against Medicare," she said in the lawsuit filed six months later under seal in U.S. District Court in Reno.
Renown has denied any wrongdoing. Stacy Kendall, its communications director, said the type of lawsuit Guardiola bought "regarding technical billing issues surrounding types of patient care ... are becoming increasingly common nationwide."
"After careful consideration we made a decision to settle the lawsuit rather than to pursue a lengthy and costly defense," Kendall said.
Bogden said the settlement states that it is neither an admission of liability by Renown Health nor a concession by the government that the claims are not well founded.
Renown Health, a nonprofit corporation, was established in 2006 as the rebranded successor to the Washoe Health System.
In fiscal year 2011, it generated $1.7 billion in total patient revenue from 38,782 inpatient admissions and 101,707 emergency room visits at the main hospital downtown and at its' Renown South Meadows Medical Center in south Reno, according to Guardiola's lawsuit.
One element of Guardiola's claims of overcharging was that patients were double-billed as both inpatient and outpatient. Renown's lawyers argued in an unsuccessful motion to dismiss the lawsuit in February 2014 that individual doctors made decisions to categorize treatment as inpatient or outpatient.
Guardiola's lawsuit claimed that physicians were complicit in the false billing practices.
Her lawsuit also listed 579 individual inpatient claims for "zero-day stays," where patients were admitted and discharged the same day. Attorneys for Renown said Guardiola misrepresented the length of patients' stays because she didn't start the clock running until after surgery, exaggerating the number of those who stayed less than 24 hours.
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