Non-Profit Taxpayers Against Fraud Urges the Federal Court to Rule Against Stanford Hospital for $468 Million Alleged Healthcare Billing Fraud

Palo Alto, CA, June 22, 2021 --(PR.com)-- The federal watchdog and non-profit public interest group Tax Payers Against Fraud Educational Fund (TAFEF) filed its independent support of the false claims action (“FCA”) against Stanford Health Care. The case is captioned United States vs. Stanford et. al. The Complaint brought on behalf of the U.S. Government alleges that Stanford and its affiliates engaged in a decade long government Medicare fraud in excess of $468 Million, primarily against the aged and disabled.

The Complaint alleges that Stanford Health Care and its surgeons including breast cancer surgeon Dr. Fred Dirbas devised a number of schemes which took advantage of a flawed medical payment system by upcoding and unbundling major surgical codes, as well as charging exorbitant fees for otherwise free services. The lawsuit alleges further that Stanford University "cattle-prodded" their doctors and billers to bill high and maximal in every case, and that Stanford University surreptitiously collected unlawful money from Stanford Hospital through an undisclosed hefty slush fund entitled the "Dean’s Tax" in order to monetize Stanford's new $2 billion dollar “arcade” which recently opened. The Complaint alleges that Stanford executives and department managers pushed aggressive billing and maintained a culture of pushing profits at any cost regardless of the lack of supporting medical documentation or records and that Stanford manipulated and altered medical and nursing records to upcode time and units of expensive surgical supplies, many of which were never even used.

The Complaint in Federal Court alleges Stanford began its scheme on or about 2008 whereby they exploited a newly implemented “EPIC” electronic medical record system and fraudulently circumvented loopholes in medical billing. The suit alleges that Stanford upcoded services resulting in hundreds of thousands of unlawful health insurance claims and that Stanford egregiously instructed and required that its medical billers and coders always bill at the maximum level and fees, regardless of medical necessity, lack of substantiating medical records, and failure to adhere to national Correct Coding Initiatives (CCI). The complaint further alleges Stanford’s failure to mitigate or cease the conduct once put on notice and demanded to cease unlawful billing.

The lawsuit alleges that Stanford knew they were submitting fraudulent claims and failed to correct their misconduct because they demonstrated repeated willingness to send refund check after refund check to certain patients multiple times in 2017 and 2018 and 2021 for unbundled and upcoded billings. The patients then made these refund checks available to the DOJ. Allegedly, Stanford would unlawfully write off certain patient balances when the patients detected the upcoding and filed grievances.

The Federal lawsuit brought on behalf of the United States Government against Stanford Hospital, captioned, United States vs. Stanford et. al. (Case No. CV 17-08726-DSF) (AFMx) is a live case now before the Ninth Circuit Court. The lawsuit was filed on behalf of taxpayers as an under-seal complaint. The lawsuit remained under federal court ordered seal from December 2017 to August 2, 2019 pursuant to 31 U.S.C. § 3279, which governs fraud against the Government, as alleged here. This statute gives private individuals the opportunity and power to help the Government recover fraudulent payments, and award the whistleblower a sizable part of the bounty. However, the disclosure to the government must be filed through their attorney via a special lawsuit. The statute also requires the whistleblower to have “original information” and allegations of fraud by contractors like Stanford Healthcare who are alleged to unlawfully bill or collect funds from the federal or state. The statute permits the citizenry to bring a “qui tam” claim on behalf of the Government. Congress specifically designed the provisions to supplement the Government’s limited resources with those of private citizens' insider information to detect fraudulent billing.

This case alleges ongoing and institutional healthcare billing fraud by Defendants Stanford Hospital, Stanford Billing Department, Lucille Packard Children’s Hospital, Stanford Healthcare, and its surgeons including Dr. Frederick Dirbas (also doing business as “Software for Surgeons” in Menlo Park). Stanford Vice President and Healthcare Billing Compliance Officer Debra Zumwalt, also a Menlo Park resident, is a named Defendant in this case. She is alleged to be one of the masterminds behind Stanford’s healthcare billing fraud schemes designed to maximize profits over safety. Ms. Zumwalt is concurrently a named Defendant in another fraud lawsuit in San Francisco State Court (CGC-18-565596), captioned, Devesa vs. Stanford-StartX Fund et. al.

Public tax returns show that Stanford and Stanford Healthcare are organized under IRS rules as purported not-for-profit organizations that pay absolutely no federal taxes. The suit alleges that Stanford collected more than $4 billion dollars of healthcare revenues in 2016 alone, and further alleges 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).

The Law Offices of Gloria Juarez represent the interests of the whistleblower, who filed suit on behalf of the United States. Ms. Juarez's firm has a special interest in prosecuting false claims act cases and uncovering Stanford Healthcare fraud.