Dignity Health will pay $37 million to settle claims that 13 of its hospitals knowingly overcharged Medicare by performing elective cardiac procedures as inpatient rather than less costly outpatient services.

The Department of Justice (DoJ) alleged that 13 hospitals in California, Nevada and Arizona billed Medicare and the military healthcare program TRICARE for elective procedures such as PCIs and pacemaker implantations as inpatient procedures between 2006 and 2010. It argued these procedures could have been performed safely and effectively in an outpatient setting.

“Because hospitals generally receive significantly higher payments from federal healthcare programs for inpatient admissions as opposed to outpatient treatment, the admission of numerous patients who do not need inpatient care, as alleged here, can result in substantial financial harm to federal healthcare programs,” the DoJ explained in a statement.  

It also cited cases of elective spinal procedures and admission of patients for common diagnoses that could be treated as outpatient care.

The whistleblower suit was initiated by former employee Kathleen Hawkins, who will receive about $6.25 million. The claims are allegations only and the settlement is not a determination of liability.

Dignity Health, formerly known as Catholic Healthcare West, is a 39-hospital system headquartered in San Francisco.