Justice Department hits Quorum with lawsuit

Quorum Healthcare has been hit with a lawsuit by the Justice Department, which split Quorum off from a larger whistleblower case against Columbia/HCA.

As with Columbia, the Quorum case is derived from information provided by James Alderson, a former Columbia reimbursement manager. Alderson alleges that both Columbia and Quorum manipulated cost reports to maximize Medicare reimbursement.

Quorum allegedly maintained reserve cost reports and funds in case fiscal intermediaries disallowed improper costs such as some telephone expenses. In one instance, the suit cites a hospital for which Quorum prepared a cost report that claimed $132,000 in interest expenses on purchases of hospital equipment.

Because the equipment was not necessary and thus was an unallowable expense, Quorum kept a $132,000 reserve in case the claim was denied, according to the suit.

This led the government to charge the company had embarked on a fishing expedition in which it deliberately filed claims that it knew were improper, but which it hoped that that fiscal intermediaries would still approve.