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George A. Saitta,
CPA, CFF, FCPA, Partner

(215) 972-5040

Representative Cases - Healthcare Fraud & Abuse
United States of America, ex rel. Mark S. Razin v. Lovelace Health Systems Inc.
Cost Report Fraud
$24.5 million Settlement

This case settled in December 2002 when Lovelace Health Systems paid the federal government $24.5 million to resolve allegations that it submitted fraudulent claims in ten years of Medicare cost reports and reopening requests. At that time, this was the largest settlement ever against a single hospital to resolve allegations involving solely cost reporting fraud. Lovelace Health Systems is a New Mexico hospital and health maintenance organization owned by Cigna Corporation. The allegations were made by Mark S. Razin of Long Beach, California, a former employee of HFA, a company now owned by Certus Corporation. HFA, a financial consultant to hospitals across the country, was the subject of a February 1999 search warrant executed by the Office of the Inspector General of the Department of Health and Human Services.

The settlement resolves the hospital's liability for allegedly submitting cost reports to Medicare and other federal health insurance programs that sought reimbursement for costs that Lovelace knew were unallowable. Cost reports provide information to determine federal funding for health insurance programs such as Medicare, Medicaid, and TRICARE. Also, the hospital established reserves in an amount equal to the unallowable costs, thus providing sufficient funds to repay the government in the event that the unallowable costs were detected.

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