Kaiser to pay
$1.9M for
bad billing

An employee will get at least
$225,000 for reporting
the inaccurate claims

Kaiser Permanente Hawaii, the state's largest health maintenance organization, has agreed to pay a $1.9 million settlement for submitting inaccurate Medicare and Medicaid claims over 17 years.

The settlement, announced yesterday, is the largest of its kind in recent years for Hawaii but is dwarfed by a $3.4 million settlement that Kapiolani Health paid in 1999 to resolve allegations of false billings.

Of Kaiser's $900,000 settlement with the state over false Medicaid claims, a whistle-blower employee will get $225,000. In addition, $559,621 of the state settlement will go to the Medicaid Investigations Recovery Fund, while $115,379 will go to the state Medicaid program.

The terms of a $1 million settlement for Medicare fraud have not been released, and officials could not say whether the employee who reported the incident will also get a chunk of the federal settlement.

The cases, filed in federal court under the False Claims Act, stem from allegations levied by the Kaiser-Hawaii employee that the provider billed Medicare and Medicaid between 1984 and 2001 for services performed by a dermatology employee who did not have a state physician's assistant license, said state Attorney General Mark Bennett. State law requires physicians' assistants to be certified.

Kaiser officials said the employee at the center of the investigation, who is now in a nonclinical position at the company, was employed before the requirement's passage and had failed to obtain a license once the law went into effect.

The employee who reported the claims to authorities is also still with the provider, a Kaiser spokeswoman said.

The state Medicare Fraud Control Unit's investigation found that in addition to the incorrect billings, Kaiser failed to "properly supervise the treatments" with the physician's assistant. The unit found no evidence of improper care or injury to Kaiser-Hawaii patients.

Kaiser Permanente Hawaii President Jan Head said Kaiser has "taken corrective action to address the issue" and is reviewing its billing systems and checking provider certifications and licenses. "We regret the mistake," Head said.

The provider is mandated by the state's settlement to complete a compliance review to ensure that similar incidents are avoided.

The False Claims Act, under which the suits against Kaiser were filed, provides for the state or federal government's recovery of triple damages, plus penalties of up to $10,000 for each false claim.

If a lawsuit is successful, the person who filed it -- usually a whistle-blower -- can receive up to 30 percent of the recovered funds, as well as attorney's fees and expenses.

The 1999 Kapiolani settlement involved two of the health providers' subsidiaries, which were alleged to have filed false claims for patients.

Kapiolani Home Health Services and Kapiolani Extended Care, which are no longer in operation, were also alleged to have filed duplicate claims and provided services to ineligible patients.

Kapiolani admitted no wrongdoing in the settlement.

Kaiser Permanente

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