Medical provider resolves fraud allegations, pays $600k to federal government

TRAVERSE CITY — A Traverse City medical provider owes $607,966 to the federal government to settle accusations of entering fraudulent Medicare and Medicaid claims.

Traverse Anesthesia Associates — a contractor with Munson Medical Center, Northwest Michigan Surgery Center, Paul Oliver Memorial Hospital and Kalkaska Memorial Health Center — was brought to court in December 2018 thanks to whistleblowing by two former employees.

Those whistleblowers, Scott Stone and Bethany McKinley, will receive a cut of the settlement.

They reported observed billing practice concerns under the False Claims Act.

The whistleblowers claim TAA instructed employees to fudge time charts to increase billable hours and wrote in a complaint that they “observed defendant doctors annotating and back-signing the records to falsely indicate that they had complied with the seven mandatory TEFRA billing requirements.”

The suit also levies those accusations against six TAA anesthesiologists — Brian Kiessling, Edward Vomastek, Frederick Campbell, Mark Aulicino, Matthew Martin and Timothy Esser.

TAA officials referred questions to Attorney Abby Pendleton, who in a written statement called TAA a “victim of allegations” and said the company disputes all of Stone and McKinley’s claims.

“Billing issues in healthcare are notoriously complex, and TAA adamantly disputes that there were any problems with its billings,” according to the statement. “The Company made no admission of liability and these were allegations only.”

Pendleton calls the payment an “economic settlement,” claiming the cost of defending the company’s innocence at trial would far exceed the settlement cost.

Munson providers have no plans to drop their contracts with TAA, said Rachel Roe, Munson vice president for legal services and general counsel.

“The allegations didn’t implicate quality of care rendered or patient safety,” Roe said Friday afternoon. “Our focus is always on patient safety and patient quality.”

The hospital handles its patient billing separately, she added, and medical billing is an extremely complicated process.

“We have dozens and dozens of employees that all they do is handle back-end billing processes,” Roe said. “And the rules change all the time.”

She said more than half of Munson’s patients fall under Medicaid or Medicare.

The U.S. Department of Health and Human Services, Office of the Inspector General and Western District of Michigan U.S. Attorney’s Office worked with the state Attorney General’s Office in investigating the matter.

The U.S. District Attorney’s office handled the federal court case, which appeared before a judge in Grand Rapids.The case started as a civil suit, but False Claims allows whistleblowers to bring lawsuits on behalf of the federal government and in turn, receive a share of recoveries. Stone and McKinley will collectively earn $120,000 of that total.

The payment closes the case with no determination of liability.

Officials with the Health Care Fraud Department did not immediately return calls for comment, and an attorney and a spokeswoman with the U.S. District Attorney’s Office declined comment. Attorney Patricia Stamler, who represents Stone and McKinley, did not return a call.

See updates at www.record-eagle.com.