By Jonathan Stempel
NEW YORK (Reuters) - Three hospitals in New York's Mount Sinai Health System will pay $2.95 million to settle Medicaid fraud charges for taking two years to repay more than $844,000 of improper billings that had been flagged by a whistleblower, authorities said on Wednesday.
The accord resolves claims that Mount Sinai Beth Israel, Mount Sinai St. Luke's, Mount Sinai Roosevelt and their former Continuum Health Partners venture violated federal and state False Claims Acts by failing to repay the funds within 60 days, resulting in "reverse false claims."
U.S. Attorney Preet Bharara in Manhattan said the case arose after Continuum had been alerted by Robert Kane, a technical director for operations, to a software glitch that caused the erroneous billing of 444 claims to Medicaid in 2009 and 2010.
But rather than make repayments, Continuum fired Kane on Feb. 8, 2011, four days after he had pushed senior management to reveal the severity of the problem, court papers show. The repayments were not completed until March 2013.
The hospitals, also known as Beth Israel Medical Center and St. Luke's Roosevelt Hospital Center, accepted responsibility for their conduct, the court papers show.
In a statement, Mount Sinai Health System said its hospitals are committed to a vigorous compliance program, and that Continuum acted in good faith in handling repayments.
New York State will receive $1.77 million from the settlement and the United States will receive $1.18 million.
Kane will be paid $590,000 from the settlement, or 20 percent of the total, according to court records and New York Attorney General Eric Schneiderman.
False Claims Act cases let whistleblowers pursue claims on behalf of governments and share in recoveries.
The case is U.S. ex rel Kane v. Healthfirst Inc et al, U.S. District Court, Southern District of New York, No. 11-02325.
(Reporting by Jonathan Stempel in New York; Editing by Steve Orlofsky)