"This isn't a case of simple paperwork errors or innocent misunderstanding of Medicare rules," said Tim McCormack, an attorney with Phillips & Cohen LLP, a Washington law form that represented whistle-blowers who told authorities about the billing practices for kyphoplasty, which is generally a one-day, outpatient procedure.
The whistle-blowers, former employees of Kyphon -- which makes equipment used in the procedure -- said the company sold the product in part by showing hospitals how to bill for kyphoplasty as if it required hospital stays.
Kyphon has been purchased by Medtronic Spine LLC, which paid $75 million to settle claims based on the overbilling scheme.
In total, the government has negotiated $149 million in settlements based on the Kyphon scheme.
The whistle-blowers, Craig Patrick and Chuck Bates, are entitled to between 15 percent and 25 percent of the settlement, the law firm said.
The most recent settlement involves hospitals located in Alabama, California, Delaware, Florida, Georgia, Hawaii, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Mississippi, Missouri, Nevada, North Carolina, North Dakota, Ohio, Oklahoma, Tennessee and Texas.
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