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Posted on Wed. Apr. 27, 2011 - 06:00 am EDT

Feds launch investigation of Lutheran

Hospital accused of overbilling

At a glance

Case: United States ex rel. and Nancy Reuille vs. Community Health Systems Professional Services Corp. and Lutheran Musculosskeletal (sic) Center LLC, dba Lutheran Hospital

Filed: U.S. District Court for the Northern District of Indiana, Fort Wayne Division

Date: Jan. 7, 2009

FORT WAYNE — Federal authorities are investigating Lutheran Hospital’s parent company amid allegations the Tennessee-based health care provider bilked the government and private insurance companies out of millions of dollars.

Lutheran Hospital was specifically named in some of the allegations.

Community Health Systems Inc., a publicly traded company, reported the investigation to the Securities & Exchange Commission in filings dated April 15, 22 and 25.

Among the revelations:

•The Justice Department, multiple U.S. Attorneys offices and the Department of Health and Human Services are working together to investigate the company’s billing practices.

•Health and Human Services on March 31 issued a subpoena for Community Health documents related to “an investigation of possible improper claims submitted to Medicare and Medicaid.”

•A former Lutheran Hospital billing specialist has accused the hospital and its parent company of systematically overcharging Medicare, Medicaid and various insurance companies for years by inflating claims for patient stays.

Company officials said in the filings that they are cooperating fully with federal authorities. A spokeswoman contacted on Tuesday declined to elaborate.

The local lawsuit was filed two years ago in U.S. District Court by Nancy Reuille, a Zanesville, Ind., woman who worked for Lutheran from 1985 to Oct. 1, 2008. Her last position was supervisor of case management.

Reuille alleges Lutheran Hospital and Community Health operated a “purposely deficient” billing system that overbilled the federal government and private insurance companies, illegally collecting “millions of dollars” more than they were owed.

Beginning in January 2000, Reuille supervised 10 case managers, who reviewed all Medicare, Medicaid, private insurance and self-pay medical records. According to the lawsuit, Reuille, a registered nurse, was recruited by the hospital’s department that appeals claims denied by insurance companies and other payers.

Reuille’s duties eventually included auditing bills for accuracy. She found numerous instances of claims that exaggerated how long patients were in the hospital’s care, often classifying them as inpatient when they were actually in the hospital for less than 23 hours, according to the lawsuit.

Hospitals can collect higher payments for patients who have longer stays.

Reuille claims she brought billing errors to the attention of hospital executives who declined to change staff billing procedures.

She said she documented some incidents before Community Health acquired Lutheran Hospital and some after.

Community Health officials were aware that federal officials were investigating allegations but said they didn’t see the formerly sealed lawsuit or its specific allegations until Friday.

Reuille’s lawsuit was initially sealed to allow federal lawyers to decide whether to join in.

A U.S. Attorney declined in December to intervene in the lawsuit. But officials are reconsidering that decision after learning of multiple ongoing investigations.

Reuille is represented by Loren Allison, a Fort Wayne attorney who couldn’t be reached Tuesday.

Community Health on Monday notified the SEC that it agreed to federal officials’ request to put the case on hold for 180 days.

Lutheran Health Network employs more than 3,900 full-time-equivalent workers in northeast Indiana.

The Fort Wayne-based network includes Lutheran Hospital, St. Joseph Hospital, Dupont Hospital, The Orthopedic Hospital and health care facilities in the region.

Community Health officials are responding to requests for information about operations at numerous hospitals.

The subpoena from Health and Human Services asks for documents concerning emergency department processes and procedures from all the company’s hospitals.

The document also seeks information about the company’s computer software used in managing patient care and its relationship with emergency department doctors, including financial agreements.

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