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Pediatric Services of America Reaches Settlement for Failing to Return Overpayments

Govt-Health-Insurance-Policy-150x150 2The first settlement involving a healthcare provider’s failure to investigate credit balances on its books has been reached. The Pediatric Services of America (PSA) has settled with the US government and several US states for $6.88 million to resolve all False Claims Act allegations made against the company. PSA, based in Norcross, Georgia, provides home nursing services to medically fragile children. Two whistleblowers, who had previously worked for the facility, came forward with extensive information demonstrating that PSA was knowingly being overpaid by the government and was not returning the excess funds. The case alleged that PSA violated federal and state law, affecting both the federal government and seventeen states.

The whistleblowers alleged that between January 1, 2008 and July 31, 2011, PSA submitted claims for services rendered by licensed practical nurses under the Georgia Pediatric Program (GAPP) that PSA knew to not be reimbursable under the Georgia Medicaid program. The claims were not reimbursable because PSA failed to document that it had conducted the monthly supervisory visits by a registered nurse as GAPP requires. These claims were submitted from PSA’s Norcross and Savannah locations. Additionally, it was alleged that PSA did not return overpayments that it received from federally-insured health programs between January 1, 2007 and June 30, 2013. Under section 6402 of the Affordable Care Act (ACA), healthcare providers must report and return overpayments by the later of (i) 60 days after the overpayment was identified or (ii) the date any corresponding cost report is due (if applicable).

The whistleblowers also claimed that between January 1, 2008 and October 31, 2014, PSA’s locations in numerous states knowingly submitted claims to those states’ Medicaid programs for services that overstated the length of time that the services were rendered by having PSA’s payroll and billing systems double round minutes worked between 23 and 30 minutes. PSA maintained credit balances on its books related to claims it submitted to various federal healthcare programs, some of which had been on its books for several years. PSA also wrote off and absorbed credit balances from overpayments into its revenue because it had not investigated the reason for the credit balances before doing so. These actions were in violation of the False Claims Act (FCA).

The whistleblowers who brought this case were two former employees of PSA, Sheila McCray and Yvette Odumosu. The actions were brought on behalf of the US government and seventeen states. Sheila McCray, who was a billing specialist, provided prosecutors with overwhelming evidence of the overpayments. While working there, she discovered the billing irregularities and attempted to, on several occasions, address these issues with her supervisors. As a result of informing them of the overpayments and PSA’s failure to refund the overpayments to federal healthcare programs, McCray was wrongfully terminated. The other whistleblower who came forward, Odumosu, was a former director of clinical nursing at PSA.

When the suit against the facility was brought, PSA cooperated with a joint audit of the credit balances on its books in order to identify all outstanding overpayments. As part of the settlement, Pediatric Services of America will pay $6.88 million to resolve the allegations. This is the first settlement of its kind, involving an FCA case where a healthcare provider failed to investigate credit balances on its books to determine if they resulted from overpayments made by a federal healthcare program. In addition to paying the settlement money, PSA has also agreed to enter into a corporate integrity agreement, which will require the company to put procedures and reviews in place that will help avoid and promptly detect conduct that is similar to that which gave rise to the settlement. Each of the whistleblowers will receive a percentage of the $1.1 million whistleblower’s share of the settlement. PSA has not acknowledged any wrongdoing. However, the facility has stated that the issues brought up in the allegations have been corrected, claiming that they partially resulted from a software upgrade in 2008 that altered data in the system.

The fraudulent acts that PSA allegedly committed ultimately drive up the costs of healthcare for everyone and waste critical program funds,  according to the US Attorney Edward Tarver of the Southern District of Georgia. Participants in federal healthcare programs are required to actively investigate whether they have received overpayments. As the health care system is based on trust, providers who ignore their fiscal responsibilities and violate the False Claims Act will be held accountable.