Lawsuit Against KPMG Raises Medicare Concerns

A lawsuit against KPMG in Florida raises issues as to whether accounting professionals should be involved in Medicare billing issues done on behalf of their clients.

The suit alleges that the firm, in 1990-93, helped five state hospitals falsify Medicare cost reports that were used to illegally inflate the hospital's payments from Medicare.

Although KPMG has publicly said they did nothing wrong (back then it was KPMG Peat Marwick), the U.S. Justice Department, last week, joined the lawsuit against the firm. By doing so, the DOJ is sending a strong alarm to accounting firms who participate in Medicare billings by implying that firms will be held legally liable for any actions they take on behalf of clients.

A timely twist to the story occurred just a week prior to the DOJ announcement. The General Accounting Office issued a report that slapped the hand of the Health Care Finance Administration for continuing to use KPMG as a federal contractor auditing Medicare cost reports.