Houston's Methodist Hospital to Pay U.S. More Than $9 Million to Resolve Allegations of Overcharging Medicare

March 27, 2009

Methodist Hospital in Houston has agreed to pay the United States $9.99 million to settle allegations that it defrauded the federal Medicare program, the Justice Department announced today.

The settlement resolves allegations that Methodist improperly increased charges to Medicare patients in order to obtain enhanced reimbursement from Medicare. In addition to its standard payment system, Medicare pays supplemental reimbursement, called outlier payments, to hospitals in cases where the cost of care is unusually high. Congress enacted the supplemental outlier payment system to ensure that hospitals possess the incentive to treat inpatients whose care requires unusually high costs.

The government alleged that, between January 2001 and August 2003, Methodist improperly inflated charges for inpatient and outpatient care to make its costs for providing such care appear greater than they actually were, and thereby obtain outlier payments from Medicare that it was not entitled to receive.

"Today's settlement demonstrates the continued commitment by the Justice Department to protect Medicare when it is overcharged by hospitals," said Acting Assistant Attorney General for the Civil Division, Michael F. Hertz. "The Department has brought numerous actions against hospitals alleged to have sought excessive outlier payments, and will remain vigilant in ensuring that hospitals do not file false claims for outlier payments in the future."

"Our ultimate goal is to make certain that every Medicare dollar is used for the benefit of Medicare recipients," said Tim Johnson, acting U.S. Attorney, Southern District of Texas. "We will continue in our efforts to assure that is done."

The settlement with Methodist was the result of a coordinated effort among the Justice Department's Commercial Litigation Branch in the Civil Division; the U.S. Attorney's Office for the Southern District of Texas, Affirmative Civil Enforcement Unit; the Department of Health and Human Services, Office of Inspector General and Office of Counsel to the Inspector General; and the Centers for Medicare and Medicaid Services, in investigating and resolving the allegations.

Source: US Department of Justice