New Complaint Filed in United States vs. Stanford Health Care (Stanford Hospitals) Alleged Billing Fraud Case

Stanford, CA, March 10, 2020 --(PR.com)-- A newly amended Complaint was just filed on March 2, 2020 in Los Angeles in the United States District Court, Central Division. The Complaint alleges that Stanford Health Care (formerly Stanford Hospital) specifically targets high dollar women’s health services including breast biopsies and preventative mastectomy with unlawful upcoding and unbundling of standard codes to achieve unjust enrichment, far above what other comparable hospitals receive for the same service.

The case is captioned, United States vs. Stanford and Stanford Healthcare et. al., Case No. CV 17-08726-DSF (AFMx). The Complaint alleges that Stanford Health Care’s billing schemes to defraud Medicare and commercial payors reach back to at least 2010 and are ongoing.

The newly amended Complaint includes alleged copies of multiple Stanford bills showing the fraudulent upcharges. The Law Offices of Gloria Juarez is a Los Angeles and Orange county Firm that represents whistleblowers in fraud against Medicare and the government; here they represent the Relator. The Complaint alleges that Stanford employs more than 311 "billers" for the 613 bed Stanford Hospital.

The complaint alleges: where national benchmarks for a breast biopsy with sentinel lymph node exam costs an average of $6,700-$15,870, on January 15, 2020 Stanford billed patient Ms. Perla Ni and HealthNet of California a staggering $143,396.66 for the same simple procedure; Stanford forced Ms. Ni to pre-pay Stanford more than $6000 out-of-pocket for her deductible.

The complaint further alleges as another example, going back to 2012, Stanford billed another young woman $153,488 for an 18-hour observation and preventative mastectomy. Stanford ultimately conceded in writing to having billed the 2012 case more than $17,940 falsely and upcoded, having since refunded $341.97 to the patient, and purportedly $15,000 to the carrier (Anthem Blue Cross). The Complaint includes alleged copies of Stanford’s refund check for the unbundled pre-operative visit, as well as Stanford Health Care’s letter from Ms. Chantel Susztar admitting to Stanford's upcoding of multiple units of surgical supplies, which were not even used.

The filed Complaint alleges Stanford University also collects money from Stanford Hospital through an undisclosed hefty slush fund entitled the "Dean’s Tax," whereby fraudulently obtained healthcare dollars which are also tax privileged through SHC’s “non-profit” status, are diverted to the University. Allegedly, Stanford doctors who are professors in the University are mandated to upcode to satisfy the Dean’s quotas and “Dean’s Tax.” The Complaint alleges that Stanford doctors are told by their Division Chief to “CLICK, CLICK, CLICK, CLICK, and it's that easy to get higher codes and more money for Stanford,” referring to Stanford’s alleged misuse of its Epic Electronic Medical Record (EMR) System.

The lawsuit was filed on behalf of taxpayers as an under-seal Complaint, which means it was prohibited from disclosure by federal court order. The case remained under seal from December 2017 to August 2, 2019 pursuant to 31 U.S. Code 3279 et. seq., which governs False Claims Actions.

The Complaint also alleges that “according to the California Attorney General Xavier Becerra, the same medical service in Stanford Health Care’s area (Northern California) is nearly double the fee at comparable Southern California hospitals.”

The lawsuit in Federal Court alleges ongoing and institutional healthcare fraud by Stanford and Stanford Healthcare in Stanford, California. The suit also alleges that Stanford Vice President and “Healthcare Billing Compliance Officer” Debra Zumwalt, a named Defendant in this case, is one of the “masterminds” behind Stanford Health Care’s fraud schemes designed to maximize profits over safety. Interestingly, Ms. Zumwalt is concurrently a named Defendant in another “fraud” action pending in the San Francisco State Court CGC-18-565596 captioned Devesa vs. Stanford-StartX Fund et. al.

Stanford and Stanford Healthcare are organized under IRS rules as purported not-for-profit organizations that pay no taxes. The lawsuit alleges that Stanford Healthcare collected more than $4 billion dollars of healthcare revenues in 2016 alone, and that Stanford’s tax returns show it nearly doubled its Medicare revenues from the government from 2012 ($460.4 million) to 2016 ($755.7 million), through ill-gotten means, healthcare fraud, and institutional upcoding.

The last widely publicized FCA lawsuit against Stanford University was the 1996 false claims action brought by Paul Biddle on behalf of the U.S. and the taxpayers. That suit resulted in a major change at Stanford where the then Stanford President, Donald Kennedy, resigned after testifying before a Congressional Committee on the fraud allegations. The suit was ultimately dismissed by Stanford through its then counsel, Ms. Debra Zumwalt, who is now a named defendant in the current fraud lawsuit.

The Los Angeles Division of the Department of Justice also recently lodged a “Statement of Interest” in Federal Court in support of this first publicly litigated false claims action (“FCA”), i.e. healthcare fraud against Stanford Health Care, in more than two decades.

Now it will be up to Federal Judge, the Honorable Dale Fisher to determine if Stanford Health Care, Dr. Fred Dirbas, Ms. Debra Zumwalt, and remaining Stanford defendants will be put on trial for their alleged Medicare and government billing fraud spanning more than a decade.