Surgical Monitoring Company and Former CEO Agree to Pay $2.7 Million to Settle False Claims Act Allegations

David B. Fein, United States Attorney for the District of Connecticut, today announced that SURGICAL MONITORING SYSTEMS, INC., doing business as Sentient Medical Systems, (“SMS”), of Hunt Valley, Maryland, and SMS’ former president and CEO, JEFFREY H. OWEN, of Tucson, Arizona, have agreed to pay more than $2.7 million to resolve allegations that SMS and OWEN violated the False Claims Act by submitting false claims to the Medicare program.

“Health care providers that overcharge Medicare drain critical funds from the Medicare program and increase health care costs,” U.S. Attorney Fein stated. “The United States Attorney’s Office is committed to preventing waste, fraud, and abuse in the Medicare program, and health care providers that improperly charge for care will be held accountable.”

SMS was formerly known as Surgical Monitoring Services, Inc. and was started by OWEN in 1995. SMS does business in numerous states, including Connecticut, and had a Connecticut subsidiary, Connecticut Surgical Monitoring Services, LLC. Through this subsidiary, SMS entered into contracts with various Connecticut hospitals to provide intraoperative monitoring (“IOM”) services to the hospitals’ patients, including Medicare beneficiaries.

IOM services are used to help reduce the risk of complications during surgical procedures by identifying changes in the brain, spinal cord, and peripheral nerve function prior to irreversible damage. During IOM services, an SMS technician in the operating room performs testing and monitoring of the patient’s nervous system and provides the results to an SMS monitoring physician at a remote location.

According to the government’s allegations, from 2003 through 2008, SMS and OWEN improperly billed the Medicare program for IOM services. First, the government alleges that SMS billed Medicare for an excessive number of hours of monitoring, by billing Medicare for IOM services allegedly performed during the entire operation, when, in fact, the SMS monitoring physician only monitored the patient for part of the operation. For example, during a six-hour operation, SMS would bill the government for six hours of monitoring, when a review of medical records indicated that the SMS’ monitoring physician only monitored the patient for four hours.

Second, the government alleges that, contrary to the relevant Medicare policy in effect at the time, SMS monitoring physicians would routinely bill Medicare for IOM services provided to multiple patients at the same time. While the relevant policy indicated that more than one patient could be monitored at one time by the monitoring physician at the remote location, the claims for IOM services submitted to Medicare had to be for the time devoted to each individual patient by the monitoring physician, not for all patients simultaneously. For example, if the physician monitored three patients for four hours, the physician could only bill a total of four hours of IOM physician services, not four hours for each of the three patients. The government alleges, however, that SMS would routinely bill Medicare for the entire time its physicians monitored multiple patients, contrary to the relevant policy that was in effect at the time.

To settle allegations under the False Claims Act, SMS and OWEN agreed to pay $2,768,795, which covers conduct occurring from 2003 to 2008.

Under the False Claims Act, the government can recover up to three times its actual damages, plus penalties of $5,500 to $11,000 for each false claim.

As part of the settlement, OWEN agreed to be excluded from participation in all federal health care programs for a period of three years.

In entering into the settlement agreement, SMS and OWEN did not admit liability.

This case was investigated by the Office of Inspector General for the Department of Health and Human Services and the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorneys Richard M. Molot and David J. Sheldon, with the assistance of Auditor Kevin A. Saunders.

People who suspect health care fraud are encouraged to report it by calling 1-800-HHS-TIPS, or the Health Care Fraud Task Force at (203) 785-9270.