Johns Hopkins Bayview Medical Center has agreed to pay $2.75 million to the United States to settle false claims that it submitted to federal health benefits programs over a 20-month period.

From July 1, 2005, to Feb. 28, 2007, Bayview submitted fraudulent claims to federal health benefits programs that were reimbursed based upon rates set by the Maryland Health Services Cost Review Commission (HSCRC), according to the United States Attorney’s Office for Maryland. By submitting false claims, Bayview allegedly inflated the reimbursement rates that it received, authorities said.

Federal authorities were alerted to these false claims when two Bayview employees who work in the coding department filed a complaint in a sealed lawsuit under the False Claims Act, according to authorities.  Employees in the Bayview coding department allegedly reviewed inpatient charts to determine a way of increasing reimbursements rates by recording secondary diagnoses, such as malnutrition or respiratory failure, which were not actually diagnosed or treated during the hospital stay. The HSCRC relied on these statements to determine Bayview’s rate of reimbursement.

The employees who reported the false claims will receive 20% of the total settlement, or $550,000, as determined by the False Claims Act.

“The hospital rate setting system in Maryland is integral to the containment of costs for federal health benefit programs and this investigation shows that abuses of this system will be prosecuted vigorously,” said United States Attorney Rod J. Rosenstein in a statement. “This settlement also demonstrates the importance of statutes like the False Claims Act to the government’s efforts to root out fraud and abuse in government programs, by encouraging individuals to come forward with evidence of fraud that would never come to light otherwise.”