Whistle Blown On Medicare Scam

Taxpayers Get Refund From A Big Provider Accused Of Padding The Bill

(CBS)  For people with osteoporosis, a painful bone disease, a simple medical device can help. Doctors use it to inject bone filler and repair tiny fractures.

The procedure, called kyphoplasty, can be done in about an hour without putting the patient to sleep.

But Kyphon, the company that made the device, stood to make a lot more money if patients were admitted to the hospital for expensive overnight stays, reports CBS News correspondent Sharyl Attkisson.

"Were you aware that patients could get up sometimes an hour later and walk out?" Attkisson asks Chuck Bates, who was a top sales manager for Kyphon.

"I was aware of that," Bates says. " … the sales people were going out to hospitals and to surgeons saying, 'You need to do this as inpatient.'"

"Which was unnecessary?" Attkisson asks.

"Which was unnecessary," Bates says.

As an outpatient procedure, Medicare would pay about $1,000 for kyphoplasty. But as an inpatient procedure, Medicare paid up to $10,000 -- your tax dollars.

Kyphon's net sales skyrocketed. The sales force was rolling in dough.

"As a salesman, you were making a lot of money," Attkisson says.

"The average sales rep made $220,000 a year," Bates says.

But the good times came crashing down when Bates found out through a hospital consultant that it's improper under Medicare to admit patients for what should be outpatient surgery. He felt he had to act.

"I mean, as a sales person, you love to make money, but you want to make money ethically," Bates says.

Around the same time, in an entirely different division of Kyphon, Craig Patrick was also raising red flags internally. One day, while briefing his superiors, Patrick says a top Kyphon official cut him off.

"In the middle of the presentation, the general counsel stopped and says, 'It's not your job to police the sales force,'" Patrick says.

"So the head lawyer of the company was telling you this?" Attkisson asks.

"Absolutely. I told him I understood what my job was, but we were breaking the law every day, and we needed to fix it," Patrick says.

Though the two men never met, they both ended up taking their stories to the Justice Department, which began a fraud investigation.

Kyphon recently settled the case, admitting no wrongdoing, but paying taxpayers back $75 million. Under whistleblower law, Bates and Patrick get to split $14 million.

A company called Metronic bought Kyphon last fall for nearly $4 billion and told us the whistleblower concerns were investigated thoroughly and appropriate action was taken.

When Kyphon was sold, the executives got major payouts. That top lawyer who Patrick says told him to keep quiet reportedly received $14 million cash, which goes to show that kyphoplasty was good for patients and corporate executives, but it was taxpayers left feeling the pain.

[metamorph2_0]

Show me one patient that thinks they should not have had an inpatient stay with a collapsed spine. Perhpas the whistleblower also saw a fast path to some money as he was tired of working in sales. The truth and what is ethical get''s lost. WOuld it be ethical to not allow a peron to rest after having a procedure to correct a collapsed spine and have them have to drive themselves home from an outpatient clinic?

[babycake6440]

you wanna talk about medicare fraud, go to some little small towns in louisiana and you will see medicade fraud, the docters are making a killing off of just colds, pain . they go to the er and say i hurt my toe its bruised they get put in the hospital and get their fix they mybe in there a week. go for their weekly check-up right back in the hospital .direct admited. thats what you call medicade fraud. louisiana hospitals and doctors need to be invesgated.

[phlashlite]

Great question someone asked... Why isn''t the general counsel going to jail instead of collecting 14 mil?!?

Let''s see, you can steal millions in taxpayer dollars and prosecutors will cut you a deal where not only do you not go to jail, you get to enjoy the fruits of your criminal activity and you don''t have to admit any wrongdoing... while the taxpayers get fleeced.

Contrast this with the jail time someone would get for possession of a couple of grams of marijuana (which is not nearly as harmful as alcohol). Is our justice system out of whack or what?

[phlashlite]

Great question someone asked... Why isn''t the general counsel going to jail instead of collecting 14 mil?!?

Let''s see, you can steal millions in taxpayer dollars and prosecutors will cut you a deal where not only do you not go to jail, you get to enjoy the fruits of your criminal activity and you don''t have to admit any wrongdoing... while the taxpayers get fleeced.

Contrast this with the jail time someone would get for possession of a couple of grams of marijuana (which is not nearly as harmful as alcohol). Is our justice system out of whack or what?

[terrorislamw]

CHINA STINKS,,,

ALWAYS HAS,,, ALWAYS WILL,,,

the U.S. government has warned Americans against muggings, beatings and even carjackings, especially in the nightlife and shopping districts of large cities.

[stn_sage]

Posted by terrorislamv at 07:12 PM : Aug 09, 2008
---------------------
It''s nice to see that CBS doesn''t discriminate against mentally insane rightwing nutjobs! But, maybe they SHOULD!

terrorislamv, you moron, stop posting your B.S. non-topical comments on every story on this site!

We''re tired of your B.S.! Go conduct your jihad against Americans and freedom somewhere else!

[element51]

So here we have a company that got caught. That''s good. But what will happen? Nothing. Maybe a little fine but that''s about it. Lawyers will make a small fortune getting these people off but there won''t be any real recovery of taxpayer money. And this is only one of thousands of rip-offs that are going on every day. In an earlier post someone spoke of the need for regulation. They are right. This all goes back to Ronald Reagan when he came into office and began to de-regulate everything. Once the regulations were gone it opened the floodgates and look where it has gotten us. We have released the wolves and allowed ourselves to become the prey. We must demand that congress bring some sanity back into government but the chances of that are slim and none.

[demwatcher]

"Kyphon, a Republican company said......

Posted by nextGenMan at 10:30 AM : Aug 09, 2008"

Records show a lot of Libs in there.

[legacyabq]

oops, my apologies. I thought you were nuts. You mean the Barbary Wars, I wasn''t reading closely enuff. Still, what does that have to do with Medicaid scams?
Kind of ranting a little, aren''t you?

Still, since the wars you refer to actually exist, I retract my opinion of your schizo-affective disorder, in leiu of new evidence! LOL, sorry, just kidding around
: )

[legacyabq]

terorislamv:

I think you should start taking your medication again. You are hyper-manic, and possibly schizoid.
And by the way, Jefferson and Madison lived and died 150 years before the world wars, to which you seem to refer, though it''s hard to tell. perhaps you mean the war of 1812? Either way: *** ?!?