University of Miami Agrees to Pay $22 Million to Resolve False Claims Act Allegations

On May 10, 2021, the University of Miami (UM) in Florida agreed to pay $22 million to resolve allegations that the University violated the False Claims Act (FCA) by ordering medically unnecessary laboratory tests and submitting false claims through both its lab and off campus hospital-based facilities.

According to the Department of Justice, UM engaged in three different practices that violated the FCA: (1) knowingly engaging in improper billing relating to its hospital facilities, (2) billing federal health care programs for medically unnecessary lab tests for patients who received kidney transplants at the Miami Transplant Institute (MTI), and (3) causing Jackson Memorial Hospital (JMH) to submit inflated claims for reimbursement for pre-transplant lab testing conducted at the MTI.

First, for the alleged involvement in improper billing relating to its Hospital Facilities, UM allegedly converted multiple physician offices to Hospital Facilities. Under the Medicare program, physician offices can be converted into Hospital Facilities if they satisfy certain requirements. Upon conversion, Hospital Facilities are required to give notice to Medicare beneficiaries that outline the financial ramifications of receiving services at Hospital Facilities as opposed to physician offices. UM allegedly converted the physician offices to Hospital Facilities and then sought payment at higher rates without providing beneficiaries the required notice – even after being advised by a Medicare Administrative Contractor that its notice practices were deficient.

As for the second allegation, UM allegedly billed federal health care programs for medically unnecessary tests for patients who received kidney transplants at MTI (a joint program run by UM and JMH). For every patient who checked into MTI, UM’s electronic ordering system triggered a “protocol” of tests to be run at UM’s laboratory, including some tests that were medically unnecessary and ordered more for financial considerations than patient care.

Finally, UM allegedly caused JMH to submit inflated claims for reimbursement for pre-transplant laboratory testing conducted at the MTI in violation of related party regulations, which limit the reimbursement a provider can obtain for tests performed by a related entity to that entity’s actual costs. UM did this by allegedly controlling JMH’s decision to purchase pre-transplant laboratory tests from UM at inflated rates in exchange for UM’s surgeons and Department of Surgery continuing to perform surgeries at JMH. JMH has also reached a $1.1 million settlement with the DOJ for its part in these alleged activities.

The allegations that led to this settlement stem from three separate qui tam suits filed against UM in 2013 and 2014, which also included additional allegations on which the United States did not opt to intervene and take over. Additionally, former Secretary of Health and Human Services, Donna Shalala, was the President of UM at the time the alleged conduct took place and one of the whistleblowers was the Chief Operating Officer, Chief Compliance Officer, VP of Medical Affairs, and a Professor of Pathology – and a direct report to Shalala. He further alleged that Shalala forced him to resign his positions at UM in January 2013.

In addition to the monetary penalties and civil settlement, UM has agreed to enter into a corporate integrity agreement (CIA) with the Department of Health and Human Services.