Hospital to Pay More Than $3 Million to Settle Whistleblower Suit

Tarrant County’s John Peter Smith Hospital (JPS) has agreed to pay more than $3.3 million to settle allegations that it violated the False Claims Act by upcoding certain claims submitted to federal healthcare programs, Acting U.S. Attorney Prerak Shah announced today.

The settlement resolves a whistleblower suit filed in 2018 by JPS’s former Director of Compliance Erma Lee, whose complaint asserted that the hospital improperly appended billing modifiers -25, -59, and -XU to hundreds of claims in order to obtain payments to which it was not entitled.

Used properly, these billing modifiers indicate that a provider administered significant care on the same day as another medical procedure that was above and beyond the preoperative and postoperative care “bundled” into the main procedure code.  

In her amended complaint, filed in September 2020, Ms. Lee alleged that she alerted hospital leadership that JPS had been improperly adding these modifiers to claims between 70 and 95 percent of the time, in essence routinely double billing for certain aspects of patients’ care.  Nevertheless, she claimed, JPS failed to reimburse payors for overpayment stemming from these improperly coded claims.

“When company executives ignored this whistleblower's concerns about improper billing, she took them to the court,” said Acting U.S. Attorney Prerak Shah. “We are proud of the citizens who speak out to protect our federal healthcare programs.”

The allegations resolved by this settlement were originally filed under the qui tam provisions of the False Claims Act, which permits private persons with evidence of fraud to sue on behalf of the government and to share in any proceeds. 

Under the Act, the United States may intervene in such an action or permit the whistleblower to pursue it.  Although the United States elected not to intervene in the case, it investigated Ms. Lee’s allegations and worked collaboratively with the relator and her counsel in their pursuit and resolution of this case.

Ms. Lee will receive $912,635 as her statutory share of the settlement proceeds.

This matter was handled on behalf of the government by Assistant U.S. Attorney Andrew Robbins on behalf of the Office of the Inspector General for the Department of Health and Human Services.

The case is captioned United States ex rel. Lee v. Tarrant County Hospital District, case no. 4:19-CV-00412-P (N.D. Tex.).  The claims settled by this agreement are allegations only and do not constitute a determination of liability.