UCI Medical Center settles federal fraud case for $1.2 million

MELODY PETERSEN / ORANGE COUNTY REGISTER

UC Irvine has agreed to pay $1.2 million to settle claims that its hospital violated federal laws by routinely allowing residents to administer anesthesia with no supervision by physicians and then billing Medicare as if the doctors were present.

The settlement comes after a multi-year federal investigation that was triggered by a whistleblower complaint filed by Dr. Dr. Dennis O’ConnerO’Connor alleged in his 2008 lawsuit that the university had “pre-filled” records to make it appear that a physician was present when patients received anesthesia administeredbyresidents or certified nurse anesthetists. In many instances, however, the physician was in a different building at the time, his complaint said.

In one case, a patient had a heart attack while undergoing anesthesia, O’Connor said in an interview, but there was no physician available to intervene. The patient survived.

Lawyers for the university denied all of O’Connor’s claims in the written settlement. They said they were settling the case to avoid the expense of protracted litigation.

In a brief written statement, university officials said the anesthesiology department had done “a top-to-bottom review” of its operations in 2008. Policies were strengthened and staff underwent new training, they said. The department now uses an electronic recordkeeping system “that does not permit the practices alleged,” the statement said.

The university “remains committed to the highest standards of patient care,” the statement said.

Because he filed the whistleblower lawsuit under the federal False Claims Act, Dr. O’Connor will receive $120,000 of the settlement amount.

O’Connor said he retired from UCI in 2008 after he had repeatedly detailed the problems to several top university officials, but was rebuffed. He said the university did its own investigation of his allegations in May 2006, but the report was never made public. “It just disappeared,” O’Connor said. “That was disturbing.”

O’Connor now works at the Veterans Administration hospital in Long Beach.

The settlement agreement covers conduct at the medical center from the beginning of 2002 to the end of 2011. Dr. O’Connor filed the lawsuit in 2008 in U.S. District Court in Santa Ana, but it was under seal while federal prosecutors investigated his allegations. A judge made the complaint public last week after the settlement was signed.

Besides the university, Dr. O’Connor’s complaint also named seven UCI physicians as defendants. He said that each of them had either filed false surgical records or had participated in creating schemes to falsely bill Medicare and Medi-Cal for services. Those physicians included Dr. Peter Breen and Dr. Cynthia Anderson, who are both former chairs of the anesthesiology department and continue to work at the hospital. The two doctors did not respond to phone and email messages left yesterday.

O’Connor claimed the university had fraudulently billed Medicare and Medi-Cal for anesthesiology services. The programs will pay for residents and nurse anesthetists to administer anesthesia but only if they are properly supervised by physicians.

He said the department stretched its staff so far that doctors were scheduled to supervise procedures in two buildings at once, making proper oversight impossible. “It was all about money,” he said. “If you stretch people thin your bottom line is better.”

In his complaint, O’Connor said that records were routinely falsified to make it appear that the doctor was present or immediately available during the procedure. He found that records were frequently filled out even before the procedure began, he said.

He also found that the medical center was routinely billing Medicare for time spent by physicians to check on recovering surgery patients. The bills were fraudulent, he said, because the patient evaluations were actually performed by unsupervised medical residents.

“There was something written in the patient’s chart,” he said, “but the attending anesthesiologist had done nothing.”

He said that some residents giving anesthesia to patients did not have a medical license.

Dr. O’Connor said that he believed that an underlying problem in the department was physicians’ failure to review cases where problems occurred and change practices so that they didn’t happen again. For example, he said, there was no review after the patient had the heart attack.

John Murray, the medical center’s public information officer, said the university did not want to say more than its written statement.

The case wasn’t the first time that investigators found problems in the medical center’s anesthesiology department. In 2008, Medicare officials threatened to cut the university’s funding after inspectors found doctors had falsified surgical records by filling them out before patients got to the operating table.

In 2010, the state Medical Board disciplined Dr. Breen. The professor admitted that in 2006 that he had falsely filled out a surgery form for a cataract patient in advance of surgery, describing the patient as stable and comfortable. The board ordered Breen to attend courses in ethics and record-keeping.