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Operator of three Central Coast hospitals pays $875,000 to settle federal claims

Federal authorities say two California hospital operators — one of which runs three Central Coast hospitals — have paid $2.3 million to settle claims that they overcharged the government for medical services, the U.S. Attorney’s Office in Sacramento said this week.

Federal auditors found that Catholic Healthcare West and Sutter Health Association improperly billed Medicare more than once for the same medical procedures.

The allegations at Catholic Healthcare West fall to 36 of its affiliates, including French Hospital Medical Center in San Luis Obispo, Arroyo Grande Community Hospital and Marian Medical Center in Santa Maria.

CHW, the nation’s fifth largest hospital provider and the largest in California, paid more than $875,000 toward the settlement. Sutter, which has hospitals in Northern California, paid more than $1.4 million.

The settlement stemmed from a yearlong investigation by the Department of Health and Human Services that began with department auditors, said Lauren Horwood, spokeswoman for the U.S. Attorney’s Office in Sacramento.

The probe centered on CHW activities from January 2002 to March 2008 on double billing Medicare for infusion therapies and treatments to break up kidney and bladder stones.

“This settlement not only recoups overpayments made by Medicare, it helps ensure more accurate billing practices by these hospital systems in the future,” U.S. Attorney Benjamin Wagner said in a statement.

Officials at the two health companies admitted no wrongdoing in agreeing to the settlement, Horwood said. No charges will be filed.

In a statement, CHW officials said the government in 2009 notified them of the overpayments. CHW auditors identified the charges — $875,564 in all — and returned the money to Medicare.

“CHW is committed to ethical business practices and is pleased to have resolved this matter,” the statement read.

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