The District of Columbia reached a settlement agreement with Children’s Hospital, Children’s National Medical Center Inc. and its affiliates (collectively, “CNMC”) on June 15, 2015, to resolve allegations that CNMC violated the False Claims Act by submitting false cost reports and other applications to the U.S. Department of Health & Human Services (“HHS”) as well as to the Virginia and District of Columbia Medicaid programs. Further details can be found in the Department of Justice’s press release announcing the settlement.

CNMC, a provider of pediatric care based in Washington, D.C., agreed to pay $12.9 million to settle claims that it: (1) misreported its available bed count on its application to HHS’ Health Resources and Services Administration under the Children’s Hospitals Graduate Medical Education Program; and (2) misstated its overhead costs on filed cost reports, resulting in overpayment from Medicare and the Virginia and District of Columbia Medicaid programs.  The lawsuit was brought under the qui tam provisions of the False Claims Act by James A. Roark Sr., a former employee of CNMC who will receive $1,890,649.98 for his role as whistleblower. Additional details are not currently available because the case is sealed.

In its press release, the Department of Justice stated that the settlement “marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative,” a partnership in which the Attorney General and the Secretary of HHS have collaborated to prosecute Medicare and Medicaid fraud. This settlement provides yet another recent example of the government’s increased efforts to aggressively pursue health care fraud, even among children’s hospitals. Given the serious implications of erroneous cost reports, all hospitals should be certain that effective organizational procedures exist to ensure their accuracy.