<< Back 10/01/03 Angel pays $1.1 million in overbilling settlement By Sarah Kucharski Angel Medical Center’s recent $1.1 million settlement regarding the incorrect billing of pneumonia cases will have no lasting effects on the hospital, said Angel CEO Mike Zuliani. The settlement was arrived at after negotiations between Angel and the U.S. Justice Department. The Justice Depart-ment had started investigating the hospital after it discovered that Angel had a higher than average number of pneumonia cases. The increased numbers were a result of an overbilling practice called “upcoding,” which often occurs when hospitals hire outside billing contractors, said DOJ Public Affairs Specialist Charles Miller. In Angel’s case, the hospital hired Tennessee-based consulting group Birman & Associates in the mid 1990s to do its billing. It was this company that was responsible for the overbilling, as it systematically upcoded simple pneumonia to complex pneumonia. “It appears that the improper billings were the result of incorrect advice from a billing consultant used by the hospital during that time period,” Zuliani wrote in a press release. The result of the upcoding was higher reimbursements for the hospital, and in return Birman & Associates got a percentage of the billing increases. Angel Medical Center no longer uses Birman & Associates for its billing operations, and the business will not be required to assist the hospital with the repayment of the $1.1 million settlement, Zuliani said. Patients at Angel Medical Center should not expect to see the hospital’s settlement reflected in their bills, Zuliani said. “We had the funds reserved and paid it out,” he said. “It has no effect on us.” Both of the largest for-profit health care companies in the U.S. — the Healthcare Company (formerly known as Columbia-HCA) and Tenet — have been involved in similar settlements stemming from violations of the False Claims Act. According to DOJ reports, the Healthcare Company accrued a slew of violations including paying kickbacks to doctors and fraudulent billing of Medicare employees. It also engaged in the practice of pneumonia upcoding, which in part lead to the Healthcare Company’s landmark settlement. The Healthcare Company’s infractions cost approximately $840 million, paid out in criminal fines, civil penalties and damages, making it the largest government fraud settlement ever reached by the DOJ as of 2000 — but certainly not the last. “We’ve had quite a few cases of pneumonia upcoding,” said the DOJ’s Miller.