Posted on: Wednesday, May 29, 2002

Kaua'i hospital pays $1.5 million in federal settlement

By Jan TenBruggencate
Advertiser Kaua'i Bureau

LIHU'E, Kaua'i — Wilcox Memorial Hospital has paid $1.5 million to settle allegations that it overbilled two federal healthcare programs for treatment of seriously ill patients in 1995-98.

It is the largest such settlement ever for a Neighbor Island hospital. There have been larger recent cases against Straub and Kapiolani hospitals on O'ahu, said Assistant U.S. Attorney Mark Recktenwald.

Under the terms of the agreement, Wilcox will not try to collect any part of the settlement from the patients who were treated.

The investigation involved claims under Medicare and Tricare, the respective healthcare programs for senior citizens and military dependents.

Wilcox, in a statement issued yesterday, said the investigation involved "a limited flawed procedure of Medicare coding" that was not intentional. As part of the settlement, the hospital has established strict procedures to prevent a recurrence and agreed to undergo periodic audits. In addition, Wilcox must maintain a telephone hot line for three years to take reports of Medicare and Tricare fraud or abuse.

Recktenwald said Wilcox was the only Hawai'i hospital identified in a two-year nationwide investigation of "pneumonia upcoding."

In certain complicated pneumonia cases, hospitals are permitted to be reimbursed at a higher rate than for regular pneumonia cases. For a number of patients with pneumonia and in nine other categories of claims, Recktenwald said, Wilcox billed for a higher reimbursement than justified.

"Our position is that the overbilling is at least reckless, but this is not a criminal case," he said.

The payment of $1.5 million covers both reimbursement for the overpayments and a penalty, Recktenwald said.