Judge OKs WakeMed fraud settlement

Federal investigators said WakeMed routinely billed Medicare for inpatient stays by people who had undergone cardiac treatments, even if they were discharged the same day as the treatment and never spent a night in the Raleigh hospital.

Physician orders to discharge patients also were frequently overwritten so Medicare could be billed, according to federal court documents.

WakeMed agreed in December to pay $8 million to settle the investigation. Prosecutors charged the hospital system with making material false statements relating to health care matters and with aiding and abetting, but they deferred prosecution of the case for two years.

If WakeMed complies with all provisions set out in the settlement agreement during that time, the charges would be dismissed.

U.S. District Judge Terrence Boyle twice declined to approve the settlement, criticizing prosecutors for not pursuing a criminal case against WakeMed or any of its managers. But he finally relented Friday and signed off on the deal, saying convicting WakeMed could hurt patients by barring the hospital from participating in the Medicare and Medicaid programs.

"The court has considered the threat that the provision of essential healthcare to WakeMed's patients would be interrupted and that the needs of the underprivileged in the surrounding area would be drastically and inhumanely curtailed should defendant be forced to close its doors as a result of the instant prosecution," Boyle wrote in his ruling. "Accordingly, after weighing the seriousness of defendant's offense against the potential harm to innocent parties that could result should this prosecution go forward, the court has determined that a deferred prosecution is appropriate in this matter."

Prosecutors have said they are confident they would have prevailed if the case went to trial, but they said settlement serves the public interest.

As part of the settlement, WakeMed has hired a firm to conduct independent compliance audits, has revised its billing policies and procedures and has reworked its executive and board structure to place more emphasis on reporting compliance.

Also, federal regulators will monitor WakeMed's practices regarding Medicare for five years as part of a corporate integrity agreement. The agreement spells out the hospital's conduct for submitting claims, training employees and reviewing policies and sets up a method for workers to disclose any future problems with Medicare billing.