Nearly 500 Hospitals to Pay $257 Million to Settle ICD False Claims Act Allegations

On October 30, 2015, the Department of Justice announced that 457 hospitals in 43 states had agreed to settle, for more than $250 million, False Claims Act allegations related to cardiac devices that were implanted in Medicare patients in violation of Medicare coverage requirements. The Department of Justice negotiated 70 separate settlements with the hospital systems, including some of the largest systems in the country.

The settlements come in the wake of a lengthy government investigation into implantable cardioverter defibrillator (“ICD”) overuse. An ICD is an electronic device that is implanted near and connected to the heart. ICD’s detect and treat chaotic, extremely fast, life-threatening fibrillations by delivering a shock to the heart, restoring the heart’s normal rhythm. Only patients with certain clinical characteristics and risk factors qualify for an ICD covered by Medicare.

Medicare coverage for the device, which costs approximately $25,000, is governed by a National Coverage Determination (“NCD”). The Centers for Medicare and Medicaid Services implemented the NCD based on clinical trials and the guidance and testimony of cardiologists and other health care providers, professional cardiology societies, cardiac device manufacturers and patient advocates. The NCD ensures that Medicare patients receive science-based “reasonable and necessary” medical treatment. The NCD provides that ICDs generally should not be implanted in patients who have recently suffered a heart attack or recently had heart bypass surgery or angioplasty; specifically, patients who suffer from these conditions must wait either 40 days (heart attack) or 90 days (bypass/angioplasty) before an ICD may be implemented. The medical purpose behind these waiting periods is to give the heart an opportunity to improve function on its own. The Department of Justice alleged that from 2003 to 2010, each of the hospitals involved in the settlements implanted ICDs during these waiting periods and improperly billed Medicare for the procedure.

The settlements represent one of the largest False Claims Act recoveries ever in terms of the number of hospitals involved. Many of the settling hospitals were named in a qui tam lawsuit brought in the Southern District of Florida by Leatrice Ford Richards, a cardiac nurse, and Thomas Schuhmann, a health care reimbursement consultant. The whistleblowers received more than $38 million from the settlements, and the Department of Justice is continuing to investigate additional hospitals and health systems.