(Washington, DC) Mayor Adrian M. Fenty today announced that the District of Columbia has reached an agreement with the US Department of Health and Human Services (HHS) that ends its investigation of Medicare claims submitted by Saint Elizabeths Hospital in 1997 and 1998. Based on an audit of claims submitted during the two year period, HHS alleged that the hospital received $12 million in overpayments for improper claims. Pursuant to the False Claims Act, the District was potentially liable for treble damages in the amount of 36 million dollars, plus civil penalties. 

“This agreement allows the District to avoid lengthy litigation to focus its efforts on the ongoing patient care reforms at St. Elizabeth’s Hospital and improving the hospital’s financial management and accountability systems,” said Mayor Fenty. 

Under the terms of the agreement negotiated by the Office of the Attorney General, the District agrees to forego claims held by HHS for services prior to October 1, 2006 but will not be required to make any additional repayments. The agreement also allows the hospital now to bill Medicare for services rendered after October 1, 2006, which will allow the District to seek reimbursement for many of the vital services provided at Saint Elizabeths Hospital. The value of the Medicare reimbursements for FY 2007 and FY 2008 are in excess of $1 million dollars respectively.

“We are confident that this agreement supports the broader reform initiatives already taking place and will result in stronger fiscal accountability at the hospital,” said Stephen T. Baron, director of the city’s Department of Mental Health, which operates St. Elizabeths Hospital.

The District has agreed to a five-year Corporate Integrity Agreement with HHS that requires the hospital to implement specific improvements in its billing and auditing controls to ensure proper submission and documentation of claims. The hospital will be required to conduct rigorous training of its employees, establish a code of conduct and set up an anonymous compliance hot line to report any suspected violations.

The agreement also requires the hospital to appoint a compliance officer to monitor its progress and hire an independent review organization to assist in establishing best practices. The District is required to make annual reports to the HHS Inspector General on its progress.
                                 
“We believe this Agreement is a fair resolution to a long process, and we are committed to meeting its terms,” said Acting Attorney General Peter Nickles.