U.S. Attorney’s Office in Philadelphia Files Lawsuit Against Ernst & Young for Allegedly Providing Hospitals Advice That Led to Medicare Overpayments

U.S. Attorney Patrick Meehan in Philadelphia on Monday filed a civil complaint against the accounting firm Ernst & Young for allegedly advising hospitals to overcharge Medicare for common blood tests, leading to excess reimbursements of $900,000 between 1991 and 1995, the New York Times reports (Freudenheim, New York Times, 1/6). The lawsuit claims that because of billing advice given by Ernst & Young, nine hospitals in Connecticut, Indiana, Pennsylvania and Virginia submitted more than 200,000 false claims to the government. The suit contends that the nine hospitals' laboratories used equipment that automatically performed a more thorough level of testing than necessary in some cases, which allowed the hospitals to bill for the complete battery of tests, regardless of whether they were requested by physicians, to maximize Medicare reimbursements. According to Ernst & Young attorney Mark Tuohey, the government permitted such billing until 1996, at which time Ernst & Young advised its clients to stop the practice. If found guilty, Ernst & Young could be ordered to pay three times the amount of damages and millions of dollars in fines. Associate U.S. Attorney James Sheehan said some of the hospitals involved in the dispute have already repaid Medicare (Caruso, AP/Long Island Newsday, 1/5).