Whistleblowing docs allege vast VUMC Medicare billing deception

Complaint unsealed after two years; university denies, says scale of allegations unrealistic

Vanderbilt University Medical Center is facing damning allegations of deceptive billing practices dating back more than a decade.

According to a lawsuit filed in 2011 and unsealed this week in U.S. District Court, VUMC has engaged in a "scheme to maximize income from its medical practices by submitting false claims to federal and state health insurance programs for physician services that Vanderbilt knows do not meet medicare's billing conditions for such services."

Filed under the False Claims Act, three doctors — all former VUMC anesthesiologists — allege a pattern of deception from the top-ranked hospital, designed to "[cut] its costs to provide the medical services while maintaining revenue by falsifying its billing."

Under federal law, hospitals are only permitted to bill Medicare and state insurance programs for "teaching physician services" if the teaching physician is present during the key portion of the procedure — and for surgeries, the law requires the teaching doctor be present during "all critical portions" and "immediately available to furnish services during the entire procedure."

The plaintiffs allege that Vanderbilt's "scheduling and staffing policies force surgeons to routinely overbook their schedules and rely on residents to perform the critical portions."

The suit goes on to claim that, oftentimes, surgeons were booked for multiple procedures simultaneously, often in geographically disparate parts of the hospital. However, according to the suit, Vanderbilt bills these procedures as having satisfied Medicare's requirements and, after a 2008 internal audit exposed the billing practice, VUMC designed, created and implemented a proprietary electronic record system which produces documentation to support the alleged false claims.

"Vanderbilt's electronic record keeping system lists back-up surgeons who are purportedly available to cover the procedures of attending surgeons during times when those surgeons have more than one ongoing operation," the suit reads. "However, those covering surgeons are not actually responsible for those surgeries. Indeed, they are never in the operating suite and are frequently not even in the hospital during their scheduled coverage."

Further, the doctors claim, Vanderbilt routinely — "nearly 100 percent of the time," according to the filing — submits false claims for so-called "medically directed" anesthesia despite not meeting the stringent federally mandated criteria.

"Vanderbilt trains and encourages residents to prepare false post-treatment records which indicate the presence of an attending physician ICUs, when in fact such physicians are not present," according to an oft-repeated allegation in the 71-page complaint.

The suit also claims that doctors who raise questions about the practice, including those who filed the suit, are "simply dismissed or removed."

One of the plaintiffs was appointed to the hospital's Compensation Committee, which is how he learned of the deception. Another alleges that he was summoned to an operating room to discover an unsupervised student nurse anesthetist treating a sedated patient undergoing open-brain surgery.

"The attending physician was nowhere to be found, and the patient appeared to be cyanotic and increasingly bradycardic as a result of inappropriate airway management," the lawsuit says.

The attending physician was, apparently, in his office in "an entirely different building."

The pervasive nature of the fraud, the doctors claim, continues because there's no way in Vanderbilt's billing system to document a procedure except to say it was compliant with Medicare's requirements. For example, for post-operative anesthesia follow-ups, "physicians completing … the records have no choice but to certify that they have provided care."

"Vanderbilt uses VPIMS [the hospital's billing system] to maximize its false billing practices by taking advantage of its remote access features to schedule attending physicians to be in multiple places at once, while continuing to bill their services as if they were actually present and personally performing the services at each place," the suit says.

For its part, VUMC says that such a conspiracy would necessarily have to be so vast as to be impossible.

"Vanderbilt takes compliance with billing requirements extremely seriously," said John Howser, assistant vice chancellor for news and communications. "Moreover, allegations within the civil complaint of large-scale efforts to intentionally defraud the government aren't realistic and would require a carefully coordinated and ongoing conspiracy involving thousands of individuals over a period of many years to execute."

The suit was filed qui tam, a method by which whistleblowers file suit on behalf of the federal government and, in turn, are entitled to part of the penalty assessed.

Under the False Claims Act, the federal government may choose to intervene. The U.S. Attorney made five motions for extension since 2011. The judge denied the fifth motion, thus unsealing the case. But that doesn't mean the feds are walking away altogether.

"The Government’s investigation has not been completed and, as such, the United States is not able to decide, as of the Court’s deadline, whether to proceed with the action. Accordingly, the United States hereby notifies the Court that it is not intervening at this time. However, the Government’s investigation will continue," a court filing says.

Howser said VUMC is aware of the investigation and has been cooperating with the government for more than two years.

"In connection with this inquiry, Vanderbilt has retained outside counsel to conduct an independent investigation of the matter and to determine whether the allegations have merit," he said. "The investigation continues but, to date, our outside counsel has not found evidence supporting the allegations. VUMC remains committed to strict compliance with federal billing regulations and to defending itself in this matter."

Between 1987 and 2010, the government intervened in 22 percent of qui tam cases and prevailed on 95 percent of those. In those cases in which the government did not intervene, the success rate was just 6 percent.

A case management conference is scheduled for Oct. 22.