San Diego Hospital to Pay $6.2 Million to Settle Transplant Billing Fraud

Sharp Memorial Hospital in San Diego has agreed to pay the U.S. government $6.2 million to settle an employee's claim that it defrauded Medicare by misrepresenting costs involved in its heart-and kidney-transplant programs, according to the U.S. Attorney's Office.

Judith A. King, a heart transplant coordinator at Sharp, alleged in a civil suit that the hospital had billed Medicare for expenses that were not incurred or did not involve organ acquisition or transplant services between 1991 and 1999.

During that period, Sharp doctors and staff performed 617 kidney transplants and 212 heart transplants.

The misrepresented costs included employee salaries, medical director fees, laboratory charges and square footage that were not incurred or used for organ acquisition activities and thus did not qualify for reimbursement, according to the U.S. Attorney's Office.

One of King's allegations was that Sharp created medical directorships for physicians as "financial inducements" for patient referrals to the organ-transplant centers, a violation of Medicare's anti-kickback statute.

She cited as an example Drs. Robert Mendez and Raphael Mendez, who direct transplant programs at St. Vincent Medical Center in Los Angeles and were named as officials at Sharp's transplant program in 1990. Although they each were paid $175,000 per year, they visited Sharp twice a month for a half a day, King said.

"Some of Mendez's patients at St. Vincent's . . . were double-listed at Sharp, and many of the Sharp transplant patients came from the St. Vincent's program," King's lawsuit said. "Mendez also refers to Sharp his international patients who are charged on a cash basis for the transplant."

Dr. Raphael Mendez, contacted by the San Diego Union-Tribune, said he was unaware of the lawsuit or the settlement. He said his brother was out of town and could not comment.

Having filed the suit as a whistle-blower under the federal False Claims Act, King will receive $1.24 million of the government's recovery from Sharp. She said after paying her attorney and taxes, she will get about $300,000. Her civil suit was dismissed as part of the settlement.

In a statement, Michael W. Murphy, Sharp president and chief executive officer, said Sharp "acknowledges certain errors were made in the preparation of the cost reports.

"However, we believe there was an honest difference of interpretation or application of complex regulations and reimbursement rules. There was never any intent to seek inappropriate reimbursement from the government, and Sharp is pleased to resolve this matter."

Other Sources: San Diego Union-Tribune