Have you notice an increase in advertising by Stanford recently? I have. There is a reason.
In December 2017 a scathing complaint was filed under the federal False Claims Act against Stanford in federal court. It has now been unsealed and is a public document. The complaint alleges Stanford misused its “Epic” electronic records system which allowed it to alter and adulterate health and billing records without detection so it could fraudulently increase its Medicare billing charges. The details in the complaint are mind-boggling.
Stanford and Stanford Healthcare are organized under IRS rules as not-for-profit organizations that pay no taxes. The lawsuit alleges Stanford collected more than $4 billion dollars of healthcare revenues in 2016 alone, and that Stanford’s tax returns show it nearly doubled its Medicare revenues from the government from 2012 ($460.4 million) to 2016 ($755.7 million) without an explainable, reasonable, or proportionate increase in expenses or overhead. Allegedly, Stanford at the same time has forced furloughs and steep pay cuts to its non-physician medical staff salaries by some 20% citing “COVID-19” losses, while remaining one of the top 5 most profitable hospitals in the U.S.
The Complaint alleges: Stanford Hospital executives participated in healthcare fraud which included upcoding and unbundling to obtain payments substantially greater than it was allowed; Stanford University had a fee-sharing agreement with Stanford Hospital called the “Dean’s tax” slush fund to monetize Stanford Hospital’s new “corridor and arcade” which opened in late 2019; to do so, Stanford executives deputized division chiefs and billing managers, who pressured physician colleagues to submit maximum level billing codes regardless of controverting medical records, which were far more lucrative codes than the hospital was otherwise lawfully entitled to charge Medicare.
And there is more.
It is alleged that Stanford also manipulated patient medical and nursing records to falsely bill, upcode time units, and upcode units of exorbitant surgical supplies – many of which were never used. Upcode means overcharge.
The Complaint specifically alleges: Stanford exploited a newly implemented “Epic” electronic medical record system to fraudulently circumvent loopholes in medical billing; they “upcoded and unbundled” services resulting in hundreds of thousands of unlawful health insurance claims; Stanford completely disregarded numerous red flags identifying these widespread coding failures and the resulting overpayments that followed.
Stanford’s alleged tactics through this time are alleged to have included threatening employees, agents, and doctors who “sounded the alarm” of this misconduct.
The Complaint alleges: Stanford division chiefs and physician champions at Stanford prodded their subordinates to just “CLICK, CLICK, CLICK, CLICK, CLICK” referring to falsified use of Stanford’s electronic medical records in order to obtain the highest-level payment codes. Stanford also regularly distributed “cheatsheets” to its billers, which required billers to code maximally and bill high in contradiction of proper billing laws.
The suit further alleges: Stanford knew they were submitting fraudulent claims and failed to correct their misconduct; Stanford would periodically unlawfully write off certain patient balances when the patients detected the upcoding and filed grievances; Stanford’s’ readiness to unlawfully “write off” thousands of dollars of patient balances confirms Stanford knew it was engaged in fraudulent conduct.
Kudos to attorney Gloria Juarez of Orange county who filed the lawsuit on behalf of the United States government against Stanford Hospital on behalf of U.S. taxpayers. The lawsuit remained under seal in the federal court from December 2017 to August 2, 2019 pursuant to 31 U.S.C. § 3279 which governs fraud against the government. The False Claim Act allows private individuals to disclose to the government “original information” suspected fraud by contractors improperly receiving funds from the government and bring a “qui tam” or false claims lawsuit on behalf of the government. The whistleblower is entitled to share in the government’s recovery, up to some 25 to 30% of what is recovered.
The case names as defendants Stanford Hospital, Lucille Packard Children’s Hospital, Stanford Healthcare, and its surgeons including Dr. Frederick Dirbas (also doing business as “Software for Surgeons” in Menlo Park), Stanford Vice President and “Healthcare Billing Compliance Officer” Debra Zumwalt, a Menlo Park resident. She is alleged to be one of the masterminds behind Stanford’s healthcare schemes designed to maximize profits.