Staten Island Hospital Agrees to Pay $90 Million to Settle Medicare Fraud Claims

Staten Island University Hospital has agreed to pay the U.S. government more than $74 million to settle several lawsuits charging it defrauded the federal Medicare and Medicaid programs, including claims that it ran an illegal substance abuse facility, according to the U.S. Department of Justice. The hospital also will pay New York State $14.9 million to settle claims affecting its Medicaid program.

Two of the lawsuits were filed under the federal and New York State False Claims Act.

One settlement, more than $25 million to the U.S. government, stems from a whistleblower lawsuit filed by Elizabeth M. Ryan, widow of an SIUH cancer patient treated for stereotactic body radio-surgery cancer on an outpatient basis. Ryan filed a false claim for the treatment, which was not covered by Medicare or TRICARE, a health insurance program for military families. The justice department’s investigation, however, showed that SIUH received payment from 1996 through 2004 by knowingly billing Medicare for the services under an incorrect code. 

The justice department launched its investigation into a SIUH substance abuse treatment program after Dr.  Miguel Tirado, a former SIUH Director of Chemical Dependency Services, filed a lawsuit alleging the hospital was billing Medicare and Medicaid for services provided at an illegal detoxification program.

The justice department said its investigation revealed SIUH was licensed to treat patients in 56 beds. However, SIUH operated 12 additional detoxification beds in a separate and locked wing of the hospital between July 1, 1994 and June 30, 2000 without a license from the New York State Office of Alcoholism and Substance Abuse Services (OASAS).  SIUH agreed to pay nearly $28 million to settle the case.

“Settlements such as this demonstrate yet again that submitting fraudulent claims to Medicare and Medicaid artificially raises health care costs and in turn steals from those who depend on these government medical programs,” Daniel R. Levinson, general inspector of the Department of Health and Human Services, said in a press release.

Under the False Claims Act, Tirado will receive $2.3 million from the federal government and $2.7 million from the state of New York for filing the lawsuit on their behalf. Ryan will receive $3.75 million as her portion of the federal government’s recovery.

The justice department said two other claims against SIUH were settled prior to filing lawsuits. It determined SIUH deliberately inflated its annual resident roster from 1996 through 2003 to receive higher Graduate Medical Education training reimbursements, which Medicare sets based on the resident cost reports submitted by hospitals.  SIUH will pay $35.7 million to settle that claim and another $1.5 million to settle claims it billed Medicare and Medicaid for treating psychiatric patients in unlicensed beds between July 2003 and September 2005.