United Memorial Medical Center to Pay $2 Million Plus Additional Contingent Payments for Allegedly Causing False Claims Related to Excessive Cost Outlier Payments and Double Billing for Covid-19 Tests

Doctor’s Hospital 1997 L.P., doing business as United Memorial Medical Center LLC (UMMC), an entity that formerly operated hospitals in the Houston, Texas area, has agreed to pay $2 million, and to make additional contingent payments, to resolve alleged False Claims Act violations for claiming excessive cost outlier payments from government health care programs and for double billing the government for COVID-19 tests that were also billed either to the State of Texas or the City of Houston.

According to the settlement agreement between UMMC and the United States, the settlement funds will be paid by one of UMMC’s principals, Ravishanker Mallapuram, and UMMC has guaranteed the payment of those funds.  

“Hospitals and other providers who participate in federal health care programs have an obligation to the taxpayers to ensure that they are billing appropriately,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the Department of Justice’s Civil Division. “We will hold accountable those who knowingly overbill or double bill for the medical services they provide to federal beneficiaries.”

In addition to its standard payment system, Medicare and Tricare provide supplemental reimbursement to hospitals called “cost outlier” payments in cases where the cost of care is unusually high. Congress enacted the supplemental outlier payment system to ensure that hospitals possess the incentive to treat inpatients whose care requires unusually high costs. This settlement resolves allegations that UMMC submitted claims for cost outlier payments by rapidly increasing its charges for inpatient care and underreporting its charges on Medicare cost reports, thereby preventing the government health care programs from adjusting those charges so that they would reasonably reflect UMMC’s actual costs. The settlement also resolves allegations that UMMC concealed and improperly avoided its obligation to reimburse the federal health care programs for any excessive outlier payments its hospitals received.

In addition, UMMC has agreed to settle allegations that it submitted claims to the Health Resources and Services Administration’s Uninsured Program for COVID-19 testing services, despite being reimbursed for those same services by either the State of Texas or the City of Houston.  

“This over $2 million settlement is significant,” said U.S. Attorney Alamdar S. Hamdani for the Southern District of Texas (SDTX). “We depend upon medical providers to be good stewards of a community’s healthcare services and of the federally funded programs that pay for those services. The case alleges UMMC made millions by overbilling those health care programs and intentionally double billing for COVID-19 testing. Instead of returning those monies to America’s taxpayers, they allegedly pocketed the money for themselves. Finding the wrongdoing and lost monies in these types of cases involves complexities akin to playing three-dimensional chess, but know this, the SDTX will not stop in its quest for justice until it can claim checkmate.”

“Hospitals and executives who run them should prioritize accurate, lawful billing of Medicare and other taxpayer-funded health care programs at all times,” said Special Agent in Charge Jason E. Meadows of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “This practice is especially imperative, however, when the world is responding to a public health crisis. At HHS-OIG, it is our fundamental responsibility to, along with our law enforcement partners, safeguard federally funded health care programs and American taxpayer monies.”

“The Department of Defense (DOD) Office of Inspector General's Defense Criminal Investigative Service (DCIS) is committed to rooting out fraud schemes that waste valuable taxpayer resources intended for the healthcare of our service members, military retirees and their families,” said Acting Special Agent in Charge Gregory P. Shilling of the DCIS Southwest Field Office. “DCIS, along with our law enforcement partners, will aggressively pursue and hold those accountable who took advantage of the pandemic for profit at the expense of DOD's taxpayer funded healthcare program, known as TRICARE.”

“The FBI and its partners will relentlessly pursue bad actors that participate in nefarious double billing at the cost of the American taxpayer and our health care system,” said Executive Assistant Director Timothy Langan of the FBI’s Criminal, Cyber, Response and Services Branch. “Violations of the False Claims Act will not be tolerated. If you do not follow the law, you will face the consequences of your noncompliance.”

The settlement resolves a lawsuit originally brought by Ryan Griffin, a former employee of UMMC, under the qui tam provisions of the False Claims Act. The Act permits private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Under the settlement announced today, Griffin will receive $300,000.

This settlement was the result of a coordinated effort by the Justice Department's Civil Division; the U.S. Attorney’s Office for the Southern District of Texas; HHS, Office of Counsel to the Inspector General and Office of Investigations; DCIS and the FBI.   

The lawsuit resolved by this settlement is captioned United States, et al., ex rel. Ryan Griffin v. Mediscope Global Services Pvt Ltd., et al., 3:21-cv-183 (S.D. TX.).

The claims resolved by the settlement are allegations only, and there has been no determination of liability.