Earlier this month, the Justice Department announced that Sound Inpatient Physicians Inc. will pay $14.5 million to settle claims that it overbilled Medicare and other federal health care programs.  Sound Inpatient Physicians is a Tacoma, Washington-based provider of hospitalists and other physicians to hospitals and various medical facilities.  Hospitalists are typically internists who give care solely to hospital inpatients and have no office or outpatient practice.

According to allegations in the initial complaint, Sound Inpatients Physicians knowingly submitted to federal health benefits programs inflated claims on behalf of its hospitalist employees for higher and more expensive levels of service than were documented in patient medical records.  Internal audits allegedly revealed widespread upcoding, i.e.,physician coding of patient encounters at levels higher than evidenced in the corresponding medical records.  Senior level executives at Sound Inpatients Physicians, including the company’s President and Chief Executive Officer, Robert A. Bessler, M.D., purportedly had explicit knowledge of the audits results.  However, according to the complaint, management chose not to take action to rectify hospitals’ coding practices.

The whistleblower in this case, Craig Thomas, was not a doctor, but a former Sound Inpatient Physicians Regional Manager for the Southwest Region.  Upon starting his employment in November 2008, Thomas conducted those internal audits that allegedly revealed Sound Inpatients Physicians’ unscrupulous behavior.  After allegedly bringing information from the audits directly to management and observing no effort to change this illegal behavior, Thomas decided to take a different type of action to eliminate fraud.  He decided to bring his assertions that Sound Inpatient Physicians had improperly billed various federal health care programs to the Government’s attention.  Thomas filed a complaint under the under the qui tam provisions of the False Claims Act on behalf of the U.S. Government in May 2009.

The False Claims Act allows private citizens to bring civil actions on behalf of the Government.  As a result of their efforts, these private citizens are able to share in any recovery.  Whistleblowers deserve our highest praise for taking the time and effort to expose fraud committed against the Government.  This type of crime costs all U.S. taxpayers and needlessly wastes federal expenditures.  Moreover, inflated claims allegedly submitted by Sound Inpatients Physicians and other companies in the health care industry jeopardize programs such as Medicare and Medicaid and limit their ability to help and care for the neediest members of our communities.

As a result of his determination to expose fraud and alleviate the burden of wasting taxes, Craig Thomas will receive a high proportion of this civil settlement.  In addition to payments by the defendants to cover his legal fees, Mr. Thomas will receive 18.5% of $145.5 million, which amounts to $2.7 million dollars.