Rex Healthcare, of North Carolina, has agreed to pay $1.9 million to settle allegations that it fraudulently charged Medicare by improperly classifying patients for inpatient services.

By classifying patients as inpatients the hospital would receive a larger reimbursement from Medicare than if they had been classified as outpatient. Hospitals that make false claims for larger Medicare reimbursements can end up driving the costs of healthcare.

This settlement is in response to procedures done from 2001 to 2007. This case was brought forward under the qui tam provisions of the False Claims Act that allow private citizens to bring forward cases of fraud on behalf of the Federal Government. Theses citizens, called relators, are entitled to a percentage of the settlement amount.

The difference between outpatient and inpatient reimbursement being so great, this case represents what we believe to be a trend in qui tam lawsuits based upon inpatient admissions.

For more information about qui tam law and Medicare fraud, contact Nolan and Auerbach, P.A.