CoxHealth reaches $60M settlement with justice department

The health system’s board of directors opted to settle with the U.S. Department of Justice rather than drag the case through court, which would have prolonged the already-three-year process and rack up more legal fees, CoxHealth officials said today at a news conference.

CoxHealth will pay an initial $35 million, plus five annual $5 million payments with 4 percent annual interest.

The deal resolves two issues CoxHealth discovered and self-reported in 2005: billing Medicare for dialysis services that it was ineligible to bill the government for, and using an incorrect revenue source to pay contracted Ferrell-Duncan Clinic physicians.

“We had an issue interpreting highly complex Medicare billing regulations and in structuring the relationship with some of our physician partners,” CoxHealth CEO and President Robert Bezanson said at the conference, adding that the issues had nothing to do with quality of care or billing for services that never happened. “It’s certainly been an expensive lesson.”

CoxHealth and its board began reserving funds when it realized the issues could have a financial impact, and that reserve along with money from a separate long-term reserve fund will cover the initial payment. The health system expects to use long-term reserve funds to pay the remaining five installments as well.

While the settlement resolves the health system’s ordeal, it does not apply to specific employees being investigated separately on the allegations, outside counsel Stephen Hill said today. He said the U.S. Attorney’s office will be in contact with them, and he confirmed that CoxHealth pays those employees’ legal fees, though officials declined to say how much that has amounted to.

Bezanson said CoxHealth would next move forward on capital improvements projects that have been on hold while a settlement was negotiated. Those include:

• construction of a 78,000-square-foot emergency room adjacent to the outpatient center at Cox South, with five trauma rooms, 57 exam rooms, a 25-bed observation unit and an embedded radiology department. A groundbreaking is slated for spring 2009;

• the addition of 286 spaces to the Cox South parking garage, under way now;

• renovations to the Walnut Lawn campus to develop it as an orthopedic hospital; and

• construction of a 60,000-square-foot, two-story ambulatory surgery center and medical office building at the Walnut Lawn campus.

The health system is focusing on improvements to its south-side facilities, but it also is proceeding with the planned overhaul of its Cox North campus, Bezanson said. The first project on that agenda is a new Cox College of Nursing and Health Sciences facility.[[In-content Ad]]