DC-based Children’s Hospital pays nearly $13 million to settle whistleblower’s cost report fraud allegations

by Ben Vernia | June 15th, 2015

On June 15, the Department of Justice announced that Children’s Hospital of Washington, D.C., had agreed to pay $12.9 million to resolve civil claims, originally brought by a whistleblower, that the pediatric hospital provided misleading cost reports and false applications for payments under a federal program to help sustain graduate pediatric medical education. According to DOJ’s press release:

Children’s Hospital, Children’s National Medical Center Inc. and its affiliated entities (collectively CNMC) have agreed to pay $12.9 million to resolve allegations that they violated the False Claims Act by submitting false cost reports and other applications to the components and contractors of the Department of Health and Human Services (HHS), as well as to Virginia and District of Columbia Medicaid programs, the Department of Justice announced today.  CNMC is based in Washington, D.C., and provides pediatric care throughout the metropolitan region.

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According to the settlement agreement, CNMC misstated information on cost reports and applications in two distinct manners to HHS.  This false information was used by HHS and Medicaid programs to calculate reimbursement rates to CNMC.  The United States contended that CNMC misreported its available bed count on its application to HHS’ Health Resources and Services Administration under the Children’s Hospitals Graduate Medical Education (CHGME) Payment Program.  The CHGME Payment Program provides federal funds to freestanding children’s hospitals to help them maintain their graduate medical education programs that train pediatric and other residents.  The United States further contended that CNMC filed cost reports misstating their overhead costs, resulting in overpayment from Medicare and the Virginia and District of Columbia Medicaid programs.

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The government announced that the whistleblower, a former hospital employee, will receive $1,890,649.98 of the settlement (this appears to be the federal portion alone, because at 14.6%, it amounts to less than the base 15% that most whistleblowers are entitled to receive under the False Claims Act).

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