On July 16, 2021 the Maryland U.S. Attorney’s Office and the State of Maryland reached a nearly $9.5 million settlement with Shore Health System, Inc. (Shore Health) to resolve False Claims Act allegations filed by a whistleblower. Shore Health, a subsidiary of the University of Maryland Medical System that operates two hospitals and several non-hospital outpatient centers located on Maryland’s Eastern Shore, was alleged to have overcharged the Medicare and Maryland Medicaid programs between 2014 and 2018 for services provided to Medicare and dual eligible Medicare and Medicaid beneficiaries.

Cohen Milstein represented the whistleblower who brought forward and filed the qui tam lawsuit in the U.S. District Court for the District of Maryland in 2016.

The United States settled the federal government’s claims in June 2019, and the State of Maryland subsequently settled the State’s claims in June 2021. The U.S. District Court ordered that the action be unsealed on July 16, 2021. In settling, Shore Health did not admit liability.

U.S. District Judge Catherine C. Blake unsealed the case on July 16, 2016.

Case Background

The system for compensating Maryland hospitals for services furnished to Medicare beneficiaries is unique. Under Maryland’s system, the Maryland Health Services Cost Review Commission (HSCRC) sets the amount that the federal Medicare program pays for inpatient and outpatient services furnished to Medicare beneficiaries at Maryland hospitals and affiliated health care facilities that are located on the campus of a hospital. The HSCRC does not have authority to set the rates Medicare pays for outpatient services provided to Medicare beneficiaries at hospital-owned outpatient centers that are off the hospital’s campus. The HSCRC’s reimbursement rates for outpatient services furnished at Maryland hospitals are generally higher than the rates Medicare pays for outpatient services furnished at hospital-owned facilities located off the hospital’s campus.

The qui tam lawsuit alleged that since mid-2014, Shore Health had been billing Medicare for outpatient services furnished at its non-hospital facilities as though the services had been provided at one of its hospitals, causing Medicare to pay it the higher HSCRC reimbursement rates for services. According to the whistleblower, Shore Health continued billing for services provided at its non-hospital centers at the higher HSCRC rates even after the health system’s leaders were notified that Medicare was and for some time had been overpaying for services provided at the non-hospital centers. The lawsuit alleged that, in total, Shore Health overbilled Medicare and Maryland Medicaid by approximately $9.5 million.

The federal False Claims Act and its state law equivalents permit private citizens to bring lawsuits on behalf of the government against persons and entities that present false or fraudulent claims for payment under government contracts or programs, such as Medicare, Medicaid, TRICARE, and the FEHB Program. Whistleblowers, like the individual who brought this lawsuit, are entitled to receive a portion of the proceeds of any settlement or judgment awarded against a defendant.

The case is captioned: The United States of America and The State of Maryland ex rel. J. Doe v. Shore Health System, Inc., Civil No. CCB-16-2605 (D. Md.).