Corporate Practice

Medicaid Fraud Case Against Medaphis Still Not Completed

According to an article appearing in the April 23, 1999, edition of the Florida Times-Union, Medaphis Emergency Medicine Physician Services has yet to reach a final settlement in an action brought by several states over alleged improper billing for Medicaid services. This announcement comes six months after Medaphis said it had concluded talks with government investigators into its operations.

There are 40 states involved in the investigation, and the different states are still adding up the amounts of their claims. Investigators would not be specific about possible settlement figures, but they have called them a "considerable amount of money." Officials from the publicly-traded Medaphis Corporation, the parent company of the unit that handles emergency room billing for physicians, did not return repeated calls about the settlement talks.

In October 1998, Medaphis officials announced that they had agreed to pay about $15 million to settle allegations about the business practices of the company brought by the U.S. Department of Justice. The company paid $8 million in 1998 and will pay $7 million throughout 1999 related to that investigation, according to a report Medaphis filed with the federal Securities and Exchange Commission. The filing makes no mention of settlement talks with state Medicaid investigators.

In 1996 and 1997, Medaphis' emergency room physician billing unit processed more than 11 million claims, of which about 4.3 million involved government-funded health care programs, according to company documents. Medaphis' physician services unit had revenues of $264.3 million in 1998 and showed an operating loss of $5.8 million for the year. Overall, the company had revenues of $349.8 million and an operating loss of $45.1 million.