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Kernan Hospital sued for Medicare fraud

The U.S. Attorney’s Office is claiming that a Baltimore hospital fraudulently rang up $1.6 million in billings to Medicare and other health programs by falsely diagnosing people with life-threatening cases of malnutrition.

Kernan Hospital is accused in a federal lawsuit with fraudulently billing Medicare, Medicaid and Tricare programs for incidences of kwashiorkor — a rare, life-threatening form of malnutrition caused by lack of protein in the diet. The lawsuit claims that since 2005 the hospital has been taking advantage of a state incentive program that rewards hospitals that deal with complex and challenging cases.

Kernan is accused of putting the diagnosis code for kwashiorkor on patients’ records to make their cases more complex than they should have been.

U.S. Attorney Rod J. Rosenstein’s office filed the lawsuit in the U.S. District Court in Baltimore on Monday. The government is seeking $1.6 million in actual damages, treble damages and an $11,000 fine for each false claim.

The hospital, part of the University of Maryland Medical System, said Tuesday that it had not been served with the lawsuit but was familiar with the government’s allegations.

“Kernan Hospital has been in discussions with the U.S Attorney’s office for some time regarding how patients with malnutrition were coded in the hospital’s billing system several years ago,” Mary Lynn Carver, senior vice president for communications, University of Maryland Medical System, said in a statement. “There are a variety of reasons why patients at Kernan may be classified with malnutrition.”

According to the U.S. National Library of Medicine, kwashiorkor is a very rare form of malnutrition that occurs when there is not enough protein in the diet. The disease is most common in “very poor” countries or in areas hit by famine or natural disasters.

The government claims that a high number of claims of extreme malnutrition started to appear after 2005 when the incentive program was implemented. Rosenstein’s office pointed out that in 2004 there were zero cases of kwashiorkor and in 2007 there were 287. The government also claims that its investigators found that 23 percent of the malnutrition cases were miscoded and the disease was not present or was not as severe as coded.

In the lawsuit, multiple examples of patients admitted to Kernan who were given a secondary diagnosis of kwashiorkor were not treated for it, or it was not listed as an associated condition. According to court records, in one case, kwashiorkor was listed as a secondary diagnosis for one patient in 2007 who was listed at 5-foot-2 and 207 pounds. The patient was put on a restricted calorie diet after his discharge, and malnutrition was not treated.

In another case, a patient was diagnosed primarily with seizures, colitis and diabetes and depression. Kwashiorkor was listed as a secondary diagnosis, but the person was not treated for the disease.

Dr. Stuart Chalew, professor of pediatrics and head of the endocrinology division at the Louisiana State University School of Medicine, co-wrote a paper on kwashiorkor in 1984 while he was on the faculty at the University of Maryland School of Medicine. He said that while the disease does appear in some instances with the homeless and during heavy drug use, it is not a common disease in the U.S.

“It’s a very severe protein and caloric malnutrition,” Chalew said. “It’s a very rare disease, and, on the face of things, without knowing the specifics, it’s possible someone might have been gaming the system.”

Chalew said it is possible that more-sensitive tests are catching the disease in its early stages, which could be triggering the diagnoses.

Carver said the diagnosis is used for low weight and for nutritional deficiencies including protein malnutrition that are determined by blood work.

“The hospital conducted an evaluation of all our malnutrition cases which resulted in a substantially different conclusion than the U.S Attorney’s office,” Carver said in the statement. “We look forward to working constructively with the U.S. Attorney’s office to resolve this case.”