United States of America, ex. rel. John Shilling v. KPMG
Cost Report Fraud Conspiracy
$9 million Settlement

This case settled in October 2001 when KPMG Peat Marwick, L.L.P. (KPMG) agreed to pay the United States over $9 million to settle allegations of preparing false hospital cost reports that were submitted to Medicare and Medicaid. KPMG, a global network of professional firms providing audit, tax and advisory services, has member firms operating in 144 countries around the world. This suite involves KPMG's work on behalf of its clients, Basic American Medical Inc. (BAMI) and Columbia Hospital Corporation (now known as HCA, Inc.) The allegations were brought by John Shilling, a former Supervisor of Reimbursement for the Southwest Florida Division of Columbia Hospital Corporation.

The government alleged that KPMG, acting as a reimbursement consultant and preparer of the cost reports, knowingly made claims for repayment on behalf of its client hospitals (BAMI and HCA, Inc.) that were false, exaggerated or ineligible for payment and concealed errors from government auditors. As a result, BAMI and HCA were able to illegally retain Medicare funds. The settlement covers conduct by KPMG relating to annual Medicare and Medicaid cost reports prepared for BAMI and HCA for fiscal years 1990 through 1992 and relates to fifteen cost reports prepared for six BAMI, later HCA, hospitals over three years (1990-1993).