Craig Patrick was told he wasn't a "team player" when he raised questions about suspected Medicare fraud by his employer, a medical device company called Kyphon Inc., according to an Associated Press report last year. Patrick, who lives in Hudson, Wisconsin, found that someone was willing to listen: the U.S. Justice Department. A lawsuit filed by Patrick and another man under the federal False Claims Act - a law designed to protect and reward insiders who report suspected fraud against the government - cost Kyphon (now owned by Medtronic) $75 million. In May, my colleague Bob Von Sternberg reported that three hospitals associated with HealthEast Care System of St. Paul agreed to pay $2.8 million for overcharging Medicare, while this week, the Justice Department announced that hospitals in Indiana and Alabama would pay $8 million more.
In a news release Tuesday, the Justice Department said the allegations involved a spine surgery called kyphoplasty, that used a kit sold by Kyphon, and contended in the lawsuit that the company "defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as an in-patient procedure, even though in many cases the minimally-invasive procedure should have been done on an out-patient basis."
“By keeping patients overnight, without regard to medical necessity, hospitals could seek greater reimbursement from Medicare and make much larger profits on kyphoplasty,” said Kathy Mehltretter, U.S. Attorney for the Western District of New York in Buffalo.
For their efforts in helping the government, Patrick and the other former Kyphon employee, Chuck Bates of Alabama, "will receive approximately $1.4 million as their share of the settlement proceeds." That's about a tenth of what they got for the Medtronic -Kyphon settlement last year.