UW devises plan to pay $35 million in fraud case

SEATTLE — The University of Washington’s medical school and two hospitals will pay the bulk of a $35 million settlement stemming from a whistle-blower lawsuit alleging that doctors systematically overbilled Medicaid and Medicare and that documents were destroyed to hide the practice.

Two UW doctors’ groups accused in the billing fraud case have agreed to pay about one-fifth of the settlement reached with the U.S. Attorney’s Office last month.

Meanwhile, officials at the medical school are asking Harborview Medical Center, run by the university and owned by King County, for $10 million over five years to help retain doctors they fear will leave because their paychecks might suffer as a result of the settlement.

David McDonald, a member of the Harborview board of trustees, argued the county-owned hospital should not have to pay for mistakes others made.

University officials have denied that any documents were deliberately destroyed and insisted the vast majority of the mistakes were accidental, the result of a complicated health care system.

The two doctors’ groups accused in the fraud case — University of Washington Physicians and Children’s University Medical Group — signed the settlement in late April, ending a five-year investigation that led to guilty pleas from two prominent doctors.

The $35 million total includes $600,000 in restitution paid by the UW on behalf of those two doctors: H. Richard Winn and William G. Couser.

The case began after a whistle-blower came forward with allegations that the doctors’ groups were overbilling Medicare and Medicaid by charging for services they didn’t perform.

The settlement of the whistle-blower’s lawsuit, which included no admissions of any wrongdoing, is being paid to the federal government, the state government and the whistle-blower.

UW spokeswoman Tina Mankowski said the university has devised a plan for:

• Children’s Hospital & Regional Medical Center to pay about $6.6 million.

• The UW Medical Center to contribute $12 million.

• The School of Medicine to contribute about $8 million.

The two doctors’ groups have agreed to pay roughly $7.7 million.

Harborview’s board of trustees has scheduled an emergency meeting Friday to vote on UW’s $10 million request.

David Jaffe, the hospital’s executive director, said he thinks it would be a mistake to deny the request.

“The settlement places a huge burden on the physicians, many of whom practice at Harborview,” Jaffee said. The $10 million would go “not to pay the settlement but to provide financial support to relieve the burden that would fall on the backs of the physicians.”

A.J. Culver, a Harborview board member, said it doesn’t sit well with him.

“I can’t see why we should ask citizens and businesses and others to pick up the tab,” he said.