JUSTICE DEPARTMENT INTERVENES IN MEDICARE FRAUD CASE
AGAINST TWO SOUTHERN CALIFORNIA HOSPITALS

WASHINGTON, DC – The government has intervened in a suit that accuses two hospitals owned by the Scripps Clinic and Research Foundation of defrauding the Medicare program, the Justice Department announced today. The suit alleges that Scripps Memorial Hospital in La Jolla, California and Green Hospital of Scripps Clinic in San Diego, California defrauded the federal health care program by charging Medicare for procedures involving experimental cardiac devices that were not properly reimbursable.

The qui tam or whistleblower lawsuit was originally filed by Kevin Cosens against a number of hospitals around the country. Under the False Claims Act, private citizens can file suit on behalf of the government and share in any recovery.

After investigating Mr. Cosens' claims, the government concluded that the two hospitals knowingly sought and received millions of dollars in Medicare reimbursement for procedures involving the devices even though Scripps knew they were not properly reimbursable. One of the procedures at issue was an atherectomy for opening clogged coronary arteries that used a device manufactured by Heart Technology, Inc. called a Rotablator. The device experienced significant problems in clinical trials at other hospitals.

Another device at issue is the Baxter Coronary Guidewire, which was used in angioplasty procedures. In 1991, clinical trials for the guidewire were terminated after it was used in only three patients. Scripps had determined that the guidewires were too stiff, and Baxter subsequently redesigned the device. The government intends to file its own complaint in the case addressing these and other devices in the next several months.

"Taxpayer-funded health insurers have a right and a duty to set responsible limits on the goods and services they will pay for," said Robert D. McCallum, Jr., Assistant Attorney General for the Department's Civil Division.

The allegations in the suit run from 1987 to 1995, but from 1987-91, Green Hospital was operated by Columbia Hospital Corporation, rather than the Scripps Foundation. In May of this year, HCA - The Healthcare Company, the successor to Columbia Hospital Corporation, entered into a settlement with the government in which it paid over $1.9 million to settle the claims in this case against several of its hospitals, including the pre-1991 claims against Green Hospital.

The government has previously entered into settlements with 15 hospital defendants in this case, recovering a total of roughly $29 million. The Justice Department continues to investigate a number of additional hospitals.

The case will be litigated jointly by the Civil Division of the Department of Justice and the United States Attorney's Office in the Southern District of California.

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