Allina whistleblowers share in $16 million fraud claim
settlement
Maura Lerner
Star Tribune
Published Jan 15 2002
Two whistleblowers who told federal officials about allegedly
fraudulent billing practices at Allina Health System will each
pocket $1.12 million as part of a $16 million settlement
between the company and the federal government.
Jeanne Koenes, a former Allina billing officer, and Scott
Grove, a former auditor who still works for the company, were
awarded a share of the settlement for their role in triggering
the federal investigation, according to court documents
released Monday.
Allina, which owns or operates 16 hospitals and 44 clinics,
agreed to the $16 million settlement in order to end a
two-year, U.S. Justice Department investigation into its billing
practices.
A federal grand jury had been investigating the whistleblowers'
allegations that Allina had used inflated claims, double-billing
and other techniques to obtain as much as $19 million in
improper payments from Medicare, Medicaid and a military
health program from 1994 to 1996. The government expanded
the investigation to cover claims submitted through July 2001.
Allina denied the charges.
Both sides agreed to the settlement "to avoid the delay,
uncertainty, inconvenience and expense of protracted
litigation," according to a Dec. 31 settlement agreement that
was made public Monday.
"We are glad to close the door on this matter," David Jones,
Allina's interim chief operating officer, said in a statement. He
said the disputed billings "occurred more than seven years ago,"
and that the company's quality of care "was never an issue."
Until now, the identities of the whistleblowers had not been
made public. They had filed suit separately under the federal
False Claims Act, which allowed them to remain anonymous
during the investigation, and to claim a share of funds
recovered by the government.
Koenes, 51, of Lino Lakes, filed her false-claims suit in 1998
and left Allina in November of that year, after 16 years with
the company. She could not be reached to comment.
In her complaint, which was unsealed Monday, she alleged that
she became aware of "substantial overbilling and overcharging,
sometimes at rates of up to 40 percent," while serving on an
Allina oversight committee.
Grove, 52, of Minneapolis, was working as a certified public
accountant for Allina when he filed the first of two
false-claims suits in 1999. From 1993 to 1998, he assisted
senior managers in complying with Medicare and Medicaid
regulations. He now works in materials management,
according to Allina.
"Scott is very happy," said Robert Hajek, Grove's attorney. "It's
been a very difficult time for him throughout this ordeal. He's
been caught between a rock and a hard place."
In his complaint, also unsealed Monday, Grove claimed he
suffered retaliation in the mid-1990s when he tried to get
Allina to reimburse the alleged federal overpayments. Grove
alleged that a supervisor told him he was passed up for a
promotion because he was "not political enough."
An Allina spokeswoman declined to comment on Grove's
allegations. "Some of his complaints are still pending," said
Kendra Calhoun, Allina's vice president for communications.
"We're working on resolving those issues amicably."
After the whistleblowers' lawsuits were filed, the government
launched a broad investigation. Among the allegations: Abbott
Northwestern Hospital in Minneapolis double-billed for
services that patients received at a mobile unit and added room
charges for outpatients who were not hospitalized.
Allina also was accused of failing to reimburse the government
even after overpayments were discovered in its own audits.
As part of the agreement, an unspecified amount of the
settlement funds will go to the Minnesota Department of
Human Services, which administers and helps pay for the
Medicaid program.
In addition, Allina agreed to adopt measures to monitor and to
educate its employees about proper billing procedures. "Staying
abreast of all that is very complicated," said Calhoun.
Robert McCallum, an assistant attorney general, said the
settlement "demonstrates our unwavering pursuit of fraud and
abuse." He also said the case shows that "health-care providers
can and will be held accountable for their billing practices."
The settlement marked the end of a series of government
investigations of Allina.
While the federal investigation was in progress, Minnesota
Attorney General Mike Hatch launched an inquiry into
Allina's expenses, accusing the company of wasting million of
dollars on executive perks and consultants. The company later
apologized, restructured its board of directors and split off its
health plan Medica into a separate company. It promised to
limit such spending in the future.
-- Staff writer Paul McEnroe contributed to this story.
-- Maura Lerner is at mlerner@startribune.com .
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