St. Mary hospital to pay U.S. $3.3 million for overcharges

St. Mary Medical Center in Langhorne, Pa., has agreed to pay the federal government $3.3 million after overcharging for Medicare and Medicaid services for six years.

The hospital realized in 2007 that it had been billing the government for hospital admissions in cases where patients should have been kept for observation only. The mistake resulted in millions of dollars worth of overcharges. The hospital admitted the mistake to the government, and has worked with the Department of Justice to reach a settlement.

Paul Kaufman,  the Assistant U.S. Attorney in Philadelphia who worked on the case, said St. Mary officials did the right thing in owning up to the mistake..

“People are increasingly realizing that it’s a better idea to come forward to us voluntarily than to wait until we discover fraud,” Kaufman said. “Or to wait until one of their employees comes and tells us about that fraud or misconduct.”

Kaufman said Wednesday recent changes in the False Claims Act make it clear that keeping money collected in error is just as illegal as purposefully defrauding the system.

Even so, Marc Wolfson, with the Office of the Inspector General at the U.S. Department of Health and Human Services, said voluntary disclosure by hospitals is still relatively rare. But it does make the settlement process go much more smoothly.

“It’s a lot easier than to have a long extended investigation that can tend to be very costly on both sides,” Wolfson said.

In a statement St. Mary said it has increased training so staff members won’t repeat the error.