UMass Memorial Pays $66K To Settle State Charges
UMass Memorial Health Care and Attorney General Martha Coakley reached a settlement on fraud charges last month, in which the Worcester-based health care system agreed to pay the state $66,000 to settle allegations that it sent unpaid bills to a Worcester homeless shelter in order to collect reimbursements from the state.
The whistle-blower case was filed in federal court in Worcester in March 2012 by Nelson Castro, a former collections analyst employed by UMass Memorial.
According to court documents, Castro alleged that the health care system sent “hundreds, if not thousands” of unpaid bills to the People in Peril homeless shelter at 701 Main St., Worcester, in an alleged ploy to establish a paper trail that would allow UMass to ultimately collect reimbursements through the state's Health Safety Net and Medicaid programs, which provide hospitals with reimbursements for uninsured patients.
The patients in question had received emergency care at UMass hospitals but hadn't listed 701 Main St. in Worcester as an address, according to court documents.
Castro alleged that UMass billed for more than $10 million in fraudulent payments, but Coakley's office said that figure was overstated, ultimately leading to the much smaller settlement of $66,000.
“We are pleased that this resolution will return more than $50,000 to the Massachusetts Health Safety Net,” said Coakley’s spokesman, Christopher Loh. “Our office conducted a thorough investigation of the whistleblower’s allegations with the full cooperation of UMass Memorial. The settlement requires that UMass Memorial provide appropriate restitution and ensures future compliance with reimbursement rules regarding emergency services for uninsured patients.”
The complaint stated that Castro filed suit after reporting his findings to his bosses, who allegedly dismissed the allegations as “insignificant.”
In a statement, UMass said it “has denied all allegations and has fully cooperated with the Massachusetts Attorney General’s Office in this matter, which is now fully resolved with a minimal payment of $66,000.”
UMass has also faced other negative news within the past week, as Standard & Poor’s Rating Services downgraded the health care system’s credit, affecting nearly $300 million in debt. S&P credit analyst Cynthia S. Keller said the outlook for UMass Memorial is stable, but that the downgrade from A- to BBB+ reflects the system’s “financial challenges, largely driven by industry pressures, including soft volumes and management turnover, which resulted in fiscal year 2012 performance that was substantially under budget and under expectations.”
S&P said a turnaround is expected as UMass carries out “multiple strategic priorities,” through fiscal year 2014 with a “substantial loss expected in 2013 and a break-even performance anticipated in 2014.”
UMass staved off a lower rating because of asset sales, its market share as the only provider of tertiary care in Central Massachusetts and its community hospitals, S&P said.
However, the agency warned a lower rating is possible if UMass posts continued operating losses beyond 2013, loses more money than expected, or takes on additional debt. If there is a decrease in Medicaid supplemental funding or if the system is consistently unable to post a positive margin without relying on that funding, a further downgrade is also expected.
For UMass Memorial to establish a higher credit rating, it would need to “re-establish long-term profitability, demonstrate successful health reform strategies, and increase unrestricted reserves closer to median levels,” S&P said.
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