The University of Miami has agreed to pay $22 million to settle three lawsuits claiming the University’s hospital system administered medically unnecessary lab tests, knowingly took advantage of the Medicare program and forced one of their hospitals to inflate reimbursement claims.

The lawsuits outlined three illegal activities by the University’s healthcare system. The first claimed the University of Miami improperly billed many of its Medicare patients who received services from its newly converted healthcare facilities. Under Medicare, a hospital system can convert physician offices into official hospital facilities but must notify the patients that the cost of services will change, if not likely increase. The lawsuit claims that the University failed to notify its Medicare patients, resulting in a gross amount of improper billing to the federal Medicare system demanding higher payments for their services.

The second lawsuit claimed that the University routinely billed the Medicare system for “unnecessary laboratory tests” anytime the Miami Transplant Institute (MTI) performed a kidney transplant. The lawsuit found that whenever MTI checked in a patient, their “electronic ordering system triggered a pre-set ‘protocol’ of tests” regardless of if the tests were essential or not. As in the first lawsuit, this resulted in not only unwarranted exams for the patients but excessive billing to the federal government, costing the American taxpayers.

The final lawsuit claimed that the University caused Jackson Memorial Hospital, a facility within its system, “to submit inflated claims for reimbursement for pre-transplant laboratory testing” by controlling the hospital’s decision to purchase the equipment. The University withheld UM’s surgeons and Department of Surgery resources unless the hospital complied.

The final lawsuit claimed that the University of Miami’s actions towards the Jackson Memorial Hospital, a facility within its system, forced the hospital to file “inflated claims for reimbursement for pre-transplant laboratory testing.” The University withheld its surgeons and Department of Surgery personnel and resources from working at the hospital until Jackson Memorial Hospital bought the laboratory tests from the University of Miami at inflated costs.

In a statement made by Acting Assistant Attorney General Brian M. Boynton for the Justice Department’s Civil Division, he argues that this type of billing for “medically unnecessary services” all “contribute to the soaring cost of health care.”

University whistleblowers utilize the False Claims Act’s qui tam provisions

The False Claims Act (FCA) was enacted in 1863 during the American Civil War when the U.S. Congress realized that suppliers were delivering second-rate goods and services to the Union Army. The FCA remains the strongest and most successful anti-fraud legislation in the country. The Act mandates that any false claim requiring money or property from the U.S. government or a contractor who would be reimbursed by the federal government would be liable for damages and penalty payments for each false claim.

In 1986, the FCA was amended to increase the amount owed by the perpetrator from double to treble damages incurred by the U.S. government for the false claim. It also raised the penalties of each false claim to a range between $5,000 and $10,000. The Act has been amended several times since 1986, and its current penalty is set at a range between $5,500 and $11,000 for each false claim in addition to the treble damages.

The FCA was the country’s first whistleblower protection. The qui tam provision, also known as the whistleblower provision, allows private individuals, known as relators, to sue on behalf of the government for false claims. This clause is the most powerful of the Act. The individuals are then able to share in any recovery collected as a result of the lawsuit. In this case, four executives of the University of Miami filed the three separate lawsuits and will receive anywhere from 15 – 25% of the $22 million settlement. The exact amount has yet to be released.

The ongoing three cases against the University of Miami were unsealed in November 2020, but the final settlement was revealed on May 10, 2021. In addition to the $22 million settlement, the University of Miami also must enter into an extensive corporate integrity agreement with the Health and Human Services Office for five years.