Banner Health Agrees to Pay Over $18 Million to Settle False Claims Act Allegations

Banner Health has agreed to pay the United States over $18 million to settle allegations that 12 of its hospitals in Arizona and Colorado knowingly submitted false claims to Medicare by admitting patients who could have been treated on a less costly outpatient basis, the United States Attorney’s Office for the District of Arizona announced yesterday.  Headquartered in Arizona, Banner Health owns and operates 28 acute-care hospitals in multiple states.

The settlement resolves allegations that 12 Banner Health hospitals knowingly overcharged Medicare patients unnecessarily.  In particular, the United States alleged that from November 1, 2007, through December 31, 2016, Banner Health billed Medicare for short-stay, inpatient procedures provided at the 12 hospitals that should have been billed on a less costly outpatient basis.  The settlement also resolves allegations that Banner Health inflated in reports to Medicare the number of hours for which patients received outpatient observation care during this time period.

“Taxpayers should not bear the burden of inpatient services that patients do not need,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division.  “The Department will continue its efforts to stop abuses of the nation’s health care resources and to ensure that patients receive the most appropriate care.”

“This enforcement action is another example of this office’s commitment to protecting the Medicare program,” said Elizabeth A. Strange, First Assistant United States Attorney for the District of Arizona.  “The United States Attorney’s Office, working with our law enforcement partners, will continue to protect Medicare by aggressively pursuing False Claims Act allegations of wrongdoing in the health care industry.”

“Hospitals that bill Medicare for more expensive services than are necessary will be held accountable,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.  “Medical decisions should be made based on patients’ conditions and needs, not on providers’ profits.”

Banner Health also entered into a corporate integrity agreement with the U.S. Department of Health and Human Services – Office of Inspector General (HHS-OIG) requiring the company to engage in significant compliance efforts over the next five years.  Under the agreement, Banner Health is required to retain an independent review organization to review the accuracy of the company’s claims for services furnished to federal health care program beneficiaries.

This settlement resolves a lawsuit filed in the United States District Court for the District of Arizona by Cecilia Guardiola, a former employee of Banner Health, under the qui tam or whistleblower provisions of the False Claims Act, which permit private citizens to bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery.  Ms. Guardiola will receive roughly $3.3 million.  The case is captioned United States ex rel. Guardiola v. Banner Health and NCMC, Inc., No. 2:13-CV-02443.

The government’s resolution of this matter illustrates the government’s emphasis on combating health care fraud.  One of the most powerful tools in this effort is the False Claims Act.  Individuals with information regarding fraud, waste, or abuse related to Medicare or other federal programs are encouraged to file a complaint with the United States Attorney’s Office through the office’s website,, or by calling (602) 514-7500.

The settlement was a result of a coordinated effort by the Civil Division, the United States Attorney’s Office for the District of Arizona, and the HHS-OIG.  The claims resolved by this settlement are allegations only, and there has been no determination of liability.

If you know of or suspect Medicare fraud, contact us now.