Damages in whistle-blower Medicare fraud case against Halifax Hospital could hit $1B
By Marni Jameson, Orlando Sentinel
The problems for Halifax Health Medical Center resulting from a 2009 whistle-blower lawsuit alleging Medicare fraud just got worse.
This week, the U.S. government, which joined the whistle-blower's attorneys in prosecuting the 764-bed Daytona Beach hospital, filed a new court document asking for more damages than it was originally seeking for alleged fraud.
The new document seeks damages of $750 million to more than $1 billion, almost doubling the previous amount the government was seeking, according to attorney Marlan Wilbanks, who is representing the whistle-blower in the case.
Even before the government raised the penalties, the suit was set to be the biggest case of its kind in the nation, according to Wilbanks.
"The largest previous lawsuit of this kind settled for just over $100 million," he said.
The government's claims represent just part of the total damages being sought in the case. The informant is also seeking significant damages.
Elin Baklid-Kunz, former compliance officer for Halifax, alleges in court documents that she witnessed more than a decade of billing fraud, unnecessary hospital admissions, inappropriate spinal surgeries and illegal kickbacks to doctors.
Most of the bills defrauded federally funded programs such as Medicare and Medicaid, according to the lawsuit.
Halifax executives dispute the allegations. "We believe our agreements are constructed properly and we're vigorously defending our position," said Halifax spokesman John Guthrie.
In addition to fraudulent billings, six oncologists and three neurosurgeons at Halifax received illegal payments or incentive bonuses tied to their performance, the suit alleges.
Baklid-Kunz has worked for the Volusia County hospital for 15 years, and for the last five years has been director of physician services. In that role, she found compensation arrangements she thought violated federal kickback laws.
Two of the neurosurgeons received annual bonuses of more than $1 million, according to the complaint.
One of those surgeons, Dr. Frederico Vinas, also performed spinal-fusion surgeries that weren't medically necessary, according to the lawsuit.
The government's claim for damages relates to only a portion of the fraud claimed in the suit, said Wilbanks, who is seeking "several hundred million dollars" more in damages.
The further damages relate to additional billing fraud, including improper procedures and admissions.
Should the government win the case, the final judgment would be based on what the court determines the penalty per fraudulent claim to be.
Claims in the case number 74,838. Each one carries a potential penalty of between $5,500 and $11,000. That places the potential judgment between $400 million and more than $800 million.
On top of that, the government is seeking $315 million in additional damages, or three times the amount Medicare paid the hospital for allegedly fraudulent bills related to these physicians services, according to the recent court document.
Halifax Health, the hospital's publicly funded parent company, also has a medical clinic in South Volusia and an oncology clinic at Bert Fish Medical Center in New Smyrna Beach.
Last month, Halifax lost a bid to further broaden its reach in Central Florida when Bert Fish Medical Center rejected its $71 million acquisition offer.
Instead, the 112-bed independent hospital chose to align with Health Management Associates, a Naples-based, for-profit hospital chain.
"There's a very a strong chance that a big bill is on the way for Halifax executives responsible for the fraud against the taxpayers," said Wilbanks.
Parties are preparing for a trial in November. The case will be tried in the U.S. District Court in Orlando.