United States of America, ex rel. James Alderson v. Quorum Health Resources
Cost Report Fraud
$85 million Settlement

This case settled in April 2001 when Quorum Health Group, Inc. agreed to pay $85 million to settle claims that it had defrauded the Medicare program from 1985 to 1999. Quorum, based in Brentwood, Tennessee, owns and manages 200 hospitals nationwide. Quorum Health Resources, a subsidiary of Quorum, also named in the lawsuit, is the nation's largest hospital management company. The suit was brought by James F. Alderson, a former employee of Quorum.

The United States and Alderson identified over two thousand inflated cost items from approximately 450 reserve cost reports prepared and submitted by Quorum. These cost reports were prepared to obtain reimbursement for hospitals from the Medicare program. Quorum prepared two cost reports for each of its owned and managed hospitals, a false, inflated cost report that was filed with the fiscal intermediary and a second, internal cost report that identified costs contained in the filed report that Quorum knew were unallowable.