Scripps Health to pay $1.5 million to settle claims related to services by unauthorized physical therapists

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an Diego-based Scripps Health has agreed to pay $1.5 million to resolve allegations that it violated the False Claims Act.

Scripps was accused of charging federal healthcare programs for physical therapy services provided by therapists without Medicare or TRICARE billing privileges. Services from unenrolled providers can be billed as “incident to” the services of an enrolled physician, but only if the physician provides direct supervision.

In its announcement of the settlement Friday, the Justice Department alleged Scripps billed the government for services provided by therapists without billing privileges and without the appropriate physician supervision.

“Unlawfully obtained payment from taxpayer-funded programs harms the entire healthcare system,” U.S. Attorney Adam L. Braverman said in a press release. “We will hold accountable all providers who defraud these programs.”

The settlement resolves allegations filed in a lawsuit by whistleblower Suzanne Forrest, a former Scripps employee. As part of the settlement, she will receive $225,000.

Scripps Health told Bloomberg News in a statement that the settlement was the resolution of a “technical error in the processing of some Medicare bills for physical therapy treatments” and that it negotiated a settlement to avoid more legal costs.

“There were no allegations related to quality or medical necessity of care in this investigation,” Scripps said.

The company, which owns four hospitals and three physical therapy or rehabilitation facilities, said it had begun its own investigation of the billing problems before learning that a whistleblower had approached the government with complaints.

The case was investigated by the Civil Division's Commercial Litigation Branch, the U.S. Attorney's Office for the Southern District of California, the Office of Inspector General for the U.S. Department of Health and Human Services, the Federal Bureau of Investigation, the Defense Criminal Investigative Service and the Defense Health Agency Program Integrity Office.