Ernst & Young is the subject if a civil lawsuit that contends the accounting firm's advice led nine hospitals to overbill the federal Medicare program by nearly $1 million.
The Associated Press reported that the suit, filed Monday by the U.S. attorney in Philadelphia, states that the firm's incorrect advice in the early to mid-1990s caused the hospitals to submit more than 200,000 false claims for common blood tests.
The hospital laboratories used equipment that automatically performed a more extensive number of blood tests than were necessary, the suit says. Even though some of the tests had not been required by a doctor, Ernst & Young advised the hospitals to bill for the complete battery of tests to maximize their Medicare reimbursement, according to court papers.
''Our work was fully consistent with professional standards and coding guidelines at the time,'' Ernst & Young said in a statement. ''We intend to defend the matter vigorously, and believe that the facts will show that our services were entirely proper.''
Mark H. Tuohey, Ernst & Young's attorney, hospitals were allowed to bill for the tests in that manner until a rule change in 1996. At that time, he said, Ernst & Young told its clients to stop the practice.
Ernst & Young said it was paid a flat consulting fee for its work, and had nothing to gain if hospitals boosted revenues.
Some of the hospitals involved â in Connecticut, Indiana, Virginia and Pennsylvania â have already repaid the money to the Medicare program, said Associate U.S. Attorney James Sheehan.
The firm could be ordered to pay triple damages, plus millions of dollars in fines if found culpable by a judge.