Ernst Pays $1.5 M to Settle Medicare Probe

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Ernst & Young LLP has agreed to pay $1.5 million to settle allegations that the firm's advice led nine hospitals to overbill the federal Medicare program.

In a lawsuit, the U.S. Attorney's office in Philadelphia had accused the firm of advising the hospitals to submit more than 200,000 false claims to Medicare for outpatient blood tests that were more sophisticated than medically necessary. The accounting firm has denied that it caused false or inaccurate claims to be submitted, the Wall Street Journal reported.

"This settlement relates to health care consulting services performed for a handful of hospitals from 1991 to 1995. It enables us to put this matter behind us," Ernst & Young said in a statement Tuesday.

The lawsuit, filed in January in federal court, sought to recover the more than $900,000 the hospitals received after making the claims. The hospitals were in Indiana, Virginia, Pennsylvania and Connecticut, and some have already repaid the Medicare program.

Ernst & Young had "held itself out to clients and potential clients as having substantial expertise in hospital reimbursement matters," according to the complaint.

"Those who market themselves as experts have the responsibility to provide accurate information," U.S. Attorney Patrick Meehan said in a press release. "The integrity of the Medicare system depends on it."

The case is connected to a federal investigation of a now-defunct consulting firm called Metzinger Associates, which helped hospitals recover payments for health claims. Federal allegations that improper payments were made based on the firm's advice led five hospitals to hire Ernst & Young to review the situation. Authorities say the firm failed to reveal the full extent of the improper billing by the hospital and Ernst & Young's role.

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