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Lawrence Memorial Hospital Calls Fraud Lawsuit ‘Baseless’

Susie Fagan
Heartland Health Monitor

Lawrence Memorial Hospital is forcefully denying fraud allegations made in a whistleblower lawsuit filed by a former employee.

The lawsuit was originally filed under seal in May 2014 by former emergency room nurse Megen Duffy and unsealed this summer. It charged that the hospital defrauded the federal government by submitting falsified Medicare and Medicaid claims.

In its response last week, the hospital charged that Duffy’s lawsuit and her failure to disclose it violated the terms of a settlement it reached with her after she was fired.

“By bringing a purported claim against LMH for alleged violations of the False Claims Act, which was concealed by Duffy from LMH at the time she entered into the agreement, and by making the scurrilous accusations set out in her purported complaint, Duffy has breached the terms of the agreement,” the hospital alleged.

Duffy was fired in October 2013 for threatening a co-worker, according to the hospital. LMH said it agreed at the end of that month to pay her $9,000 to avoid the “nuisance” of litigation. Had it known that Duffy filed the whistleblower lawsuit under seal in May 2013, the hospital said it would not have entered into the agreement.

LMH is seeking unspecified damages from Duffy to cover the costs of defending itself against the lawsuit and for “enduring public disparagement” caused by her “baseless allegations.”

Duffy’s lawsuit, filed under a federal law that allows whistleblowers to act on behalf of the federal government, was unsealed after the U.S. Justice Department investigated the charges and decided not to intervene in the case.

Robert Collins, Duffy’s attorney, said the department’s decision didn’t necessarily reflect on the merits of the case. He said the department intervenes in fewer than 25 percent of the cases pursued on the government’s behalf because of staffing limitations and other factors.

Duffy alleged that emergency room personnel at LMH were instructed to alter the arrival times of possible heart attack patients to coincide with timestamps automatically generated when patients were connected to electrocardiogram monitors.

Showing that patients were being monitored the minute they arrived significantly improved LMH’s performance data and qualified it for higher incentive payments from the federal government, according to Duffy’s complaint.

In its response, the hospital denied altering records and said Duffy’s allegations were based on “an incorrect understanding of reporting obligations” and the mistaken assumption that the time at which electrocardiogram monitoring begins cannot be reported as a patient’s arrival time.

The hospital cited the same treatment guidelines referenced in Duffy’s complaint but argued they don’t support her allegations.

Instead, it said, “These guidelines confirm that emergency department ECG reports are one of the types of documentation that may be used to document hospital ‘arrival time.’”

Under the federal False Claims Act, whistleblowers alleging fraud are entitled to between 25 percent and 30 percent of whatever money is recovered. Duffy’s lawsuit doesn’t specify a damage figure, but Collins said that, when combined with penalties, it could reach as high as $10 million.

Jim McLean is executive editor of KHI News Service in Topeka, a partner in the Heartland Health Monitor team.

Jim McLean is a political correspondent for the Kansas News Service, a collaboration based at KCUR with other public media stations across Kansas. You can email him at jim@kcur.org.
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