New York’s Mt. Sinai Hospitals can’t seem to catch a break in its long-running battle with whistleblower Bob Kane. First, the government joined the case and wanted not just the $1,000,000 in Medicaid overpayments, but an additional $13,000,000. Why $13,000,000? Well, $1,000,000 trebled is $3,000,000; the $11,000 per-claim penalty is about $10,000,000; add them together and bingo, $13,000,000. (And that doesn’t include the amounts the New York State and New Jersey Medicaid programs are demanding.) Then on August 3 the court roundly rejected Mt. Sinai’s motion to dismiss and its interpretation of the 60-day repayment rule.
Through a program glitch, in early 2009 Mt. Sinai started charging Medicaid for services already covered by capitated payments it received. After two years the software vendor corrected the glitch and sent Mt. Sinai a letter of explanation.
Mt. Sinai asked Bob—then its employee—to review the records and identify overpayments. In February 2011 Bob produced a spreadsheet showing 900 erroneous claims totaling $1,000,000. In fact, Bob was wrong about approximately half the claims, but right about the other half. Four days after delivering his spreadsheet, Bob was canned. Mt. Sinai started repaying the claims in April 2011 and finished in March 2013.
The government joined Bob’s whistleblower suit, relying on the requirement that overpayments be repaid within 60 days after they’re “identified.” Mt. Sinai argued that the 60 days didn’t start until it had conclusive evidence of all erroneous claims, including the precise amounts. But the court accepted the government’s position that the period began the day Bob presented his spreadsheet; that’s when Mt. Sinai should have known it had a duty to repay.
Mt. Sinai made some good arguments, but it made at least one truly bad argument, triggering this reaction: “The Court finds implausible Defendants’ suggestion that they delayed their statutorily-required duty because they were waiting for a report from their terminated employee.”
Bob, pink slip in hand, wasn’t working on the spreadsheet. He was looking up “qui tam attorneys” in the Yellow Pages.
The case is U.S. ex rel. Kane v. Healthfirst, Inc. 11 Civ. 2325 (ER) (S.D.N.Y., Aug. 3, 2015).
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