A former Mercy Hospital billing official claims the health care provider reaped millions of dollars in improper payments from the Medicare system.

Jennifer Worthy, who had been Mercy’s manager of patient accounts, filed a lawsuit after resigning from the hospital in early 2014. A federal judge in Maine last week denied most of the motions filed by Mercy and two billing companies that were seeking to dismiss her lawsuit, clearing the way for the case to move forward.

U.S. District Judge John A. Woodcock Jr. did dismiss some of Worthy’s claims under whistle-blower protection laws because they weren’t filed in time, but the bulk of her allegations are proceeding.

Wayne Clark, spokesman for Mercy, said Worthy’s claims have been investigated by state and federal officials and both declined to get involved with her lawsuit.

“While the law allows the employee to pursue the claim independently, we believe the lawsuit is deficient on the law and the facts,” he said.

Clark also noted that Woodcock’s order only allows the case to proceed and does not represent findings on the merit of Worthy’s claims. The hospital disputes those claims, he said, and Mercy “will vigorously defend ourselves.”

In her lawsuit, Worthy charges that Mercy and the two billing companies, Accretive and California Healthcare Medical Billing, engaged in a number of schemes to improperly bill Medicare, the government insurance program for the elderly. Those plans included “unbundling” bills and elevating the severity of patients’ visits to doctors – both of which she said resulted in higher bills to Medicare – and removing coding to get around Medicare limits and delays on some bills.

Also named in the lawsuit is Eastern Maine Healthcare Systems, the parent company of Portland-based Mercy Hospital.

The basis for the lawsuit is the False Claims Act, which dates back to the Civil War and was used by President Abraham Lincoln as a tool to prevent the government from being defrauded by contractors. It is often used by whistle-blowers to draw attention to potentially fraudulent government contracts or faulty goods or services provided to the government.

Jeffrey Neil Young, one of Worthy’s lawyers, said the overbilling amounts to “millions” of dollars, but he said more precise accounting won’t be available until lawyers get access to Mercy records as the trial moves forward.

After Worthy sued, the hospital and the billing companies moved to dismiss her allegations. Now that Woodcock has said most of the case can move forward, Mercy is supposed to reply to the lawsuit itself by early February, Young said.

Then, lawyers will begin exchanging records and taking depositions. Young said he doesn’t expect the case to be tried in court until next year.

Worthy claims that when she was a Mercy employee, she repeatedly objected to the practices used by Accretive and CHMB, but Mercy officials failed to force the companies to change their methods. Accretive’s methods have been criticized before, including in Minnesota, where state officials said the company stationed debt collectors in emergency rooms and demanded that patients pay their bills before getting treatment.

The hospital and companies asked Woodcock to throw out the case because they argued that it wasn’t specific enough. But Woodcock instead said Worthy’s allegations are “copious and dense” and he needed 34 pages to summarize them in his order denying most of the hospital and billing companies’ motions to dismiss.

Young said Worthy supplied several specific examples of what she alleges are improper billing and will be able to provide more once lawyers gain access to more of the hospital’s records.

The parts of the lawsuit that Woodcock dismissed relate to Worthy and her employment, rather than the underlying fraud allegations. For instance, he dismissed one allegation against CHMB, saying there’s no evidence that the company could be considered her employer, rather than Mercy and Accretive. He also dismissed her attempt to get monetary damages and lawyers fees under a state whistle-blower protection law, noting that her lawyers agreed that she missed a deadline for filing for those remedies under that act.

Worthy alleged that her resignation was a “constructive dismissal” by the hospital because she was working in a hostile environment and Mercy ignored her repeated complaints about the billing practices, creating intolerable conditions for her to continue working. Young said that even though the judge dismissed part of Worthy’s lawsuit that alleged she was wrongfully discharged, she may be able to pursue that claim by other means.

Young said Worthy now works as director of patient financial services for another health care provider.

 

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