Buckhead-based Piedmont Healthcare Inc. has reached an agreement to pay the federal government $16 million to settle allegations it violated the False Claims Act.

The hospital system has 11 locations and 250 doctors’ and specialists’ offices in Georgia, including Piedmont Atlanta Hospital in Buckhead. It was accused of billing Medicare and Medicaid for procedures at the more expensive inpatient level of care instead of the less costly outpatient or observation one.

According to a news release, the settlement also resolves allegations Piedmont paid a commercially unreasonable and above-fair-market value to acquire Atlanta Cardiology Group in 2007 in violation of the federal Anti-Kickback Statute.

“Billing the government for unnecessary inpatient services wastes precious government resources and taxpayer dollars,” U.S. Attorney Byung J. “BJay” Pak said in the release. “All appropriate action will be taken to ensure that beneficiaries of federal health care programs received services untainted by overcharges and improper financial incentives.”

Derrick L. Jackson, special agent in charge of the U.S. Department of Health and Human Services’ Office of Inspector General, added, “Our watchdog agency will continue to aggressively investigate healthcare providers that attempt to boost their profits by billing Medicare and Medicaid for medically unnecessary services and engaging in kickback schemes. We will not tolerate such greed-fueled schemes, which bilk taxpayer-funded health care programs and undermine the public’s trust in the healthcare industry.”

Georgia Attorney General Chris Carr said, “Our office will continue to work with our federal partners to ensure that healthcare providers abide by rules that serve as important safeguards for public safety and public resources.”

The settlement resolves two separate False Claims Act allegations. First, between 2009 and 2013, Piedmont’s case managers allegedly overturned the judgment of its treating physicians on several occasions and billed Medicare and Medicaid at the more expensive inpatient level of care even though the treating physicians recommended performing the procedures at the less expensive outpatient or observation level of care.

Second, in 2007 Piedmont allegedly acquired the Atlanta Cardiology Group, a physician practice group, in violation of the federal Anti-Kickback Statute by paying a commercially unreasonable and above-fair-market value for a catheterization lab partly owned by the practice group.

The settlement resolves a lawsuit filed in the U.S. District Court for the Northern District of Georgia by a former Piedmont physician under the qui tam or whistleblower provisions of the False Claims Act, which allows individuals to bring lawsuits on behalf the U.S. and obtain a portion of the government’s recovery. The whistleblower in this case will receive nearly $3 million.

In a statement, Piedmont addressed the issue and the fine.

“Staying true to our purpose, Piedmont Healthcare’s doctors and nurses always make decisions based on the best interest and the health of the patient,” the hospital system stated. “The care provided in these circumstances from over 10 years ago was no different. The issue in this matter from 2009 to 2013 involved decisions regarding whether a hospital patient should be classified as an inpatient status or as on observation status, which was a major challenge for every health system in the country at the time. Since that time, the government itself recognized the confusing standards and in 2013 instituted a new ‘two-midnight’ rule to provide clarity.

“During the period in question, Piedmont assigned patient status as best it could, in part with the assistance of an industry-leading third-party vendor that helped interpret these technical definitions. In all cases, our doctors and nurses made their decisions based on the best interest and health of their patients — just like they always have and always will. Our decision to settle is not an admission of liability, simply the best way to end a costly and time-consuming investigation so we can continue to focus on caring for the communities we serve across Georgia.”

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