BRATTLEBORO — Brattleboro Memorial Hospital has agreed to pay more than $1.6 million to settle allegations it improperly coded Medicare and Medicaid claims for laboratory tests, resulting in overpayments.

The settlement ends a civil suit filed a little over two years ago by a former hospital employee.

In February 2016, the former employee, Amy Beth Main, filed a complaint in U.S. District Court in Burlington, Vt., alleging the hospital’s Medicaid and Medicare billing practices violated the federal False Claims Act. She later amended the complaint to claim the hospital violated a similar Vermont law, in addition to the federal statute.

In an emailed statement Monday, the hospital denied “intentional wrongdoing” and said it has fixed the problem that resulted in incorrect bills.

The settlement does not mean the hospital is admitting liability, the U.S. Attorney’s Office for Vermont said in a news release.

The federal False Claims Act imposes civil penalties on people and entities that knowingly or recklessly submit false claims to the U.S. government for payment. Main filed her complaint under a provision of the law that allows private citizens to sue on behalf of the government if they learn of alleged fraud against public agencies. Those who bring the lawsuits may be entitled to a part of the recovered damages.

In its news release Monday, the U.S. Attorney’s Office said the hospital submitted “a number of outpatient laboratory claims lacking documentation necessary to support reimbursement by Medicare and Medicaid” between 2012 and 2014.

Brattleboro Memorial Hospital, in its statement, said some orders for lab tests inadequately documented diagnosis codes that appeared on billing claims.

“We take issues like this very seriously, and invest considerable time and resources into creating a robust, compliant billing process,” Jonathan Farina, the hospital’s chief compliance officer, said in the statement.

The settlement money will be divided between Medicare, the federal Medicaid program and Vermont’s Medicaid program. States and the federal government share costs for Medicaid.

Gina Pattison, a spokeswoman for the hospital, said the payment will come out of funds that were set aside for a possible settlement after the institution learned of the problem.

Brattleboro Memorial Hospital had revenues of $78.9 million in the year ending September 2017, financial statements show.

Main began working for Brattleboro Memorial Hospital as its director of patient financial services in July 2014, according to a resume included in court filings. The position involved overseeing billing, according to her complaint. 

In her complaint, written by her attorney, Main said she noticed “wrongfully coded” bills that caused Brattleboro Memorial Hospital to be reimbursed by the federal health programs for services “at a higher level and rate than were actually delivered” to patients.

Main said she brought up the billing issues to hospital executives multiple times, including in a July 2015 internal report, and advocated for reforms to training and documentation practices. She claims the hospital administration showed “resistance” to changes, though she was able to fix some “improper coding and billing procedures.”

Both the Department of Justice and hospital statements set the time frame for the claims in question as January 2012 to September 2014.

The hospital said the overpayments ceased after that point, due to “internal corrective actions” that resolved the problem.

In early 2016, the hospital began an internal investigation into the billing issue, it said in the statement, which doesn’t specify why the investigation began at that time. Later that year, administrators voluntarily disclosed to federal authorities that the hospital had received overpayments, the statement said.

Main claimed she felt pressure after complaining of the billing issues, and left her position in February 2016 due to a “hostile work environment.” She filed the lawsuit 12 days later, court records show.

The Department of Justice news release does not mention Main’s resignation or claims about the work environment. Pattison declined to comment on Main’s departure, citing employee privacy.

Main was not immediately reachable for comment Monday.

The investigation into the allegations against the hospital involved the U.S. Attorney’s Office for Vermont, the U.S. Department of Health and Human Services and a Medicaid fraud unit within the Vermont Attorney General’s Office, according to the Department of Justice’s news release.

Sentinel staff writer Liora Engel-Smith contributed to this report.

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Brattleboro hospital to pay more than $1.6M to settle allegations about Medicare, Medicaid claims