That three hospitals within  the Mount Sinai Health System, in New York, must pay  the Feds nearly $3 million to settle a whistle-blower suit alleging that they held onto Medicare and Medicaid overpayments beyond the 60-day repayment window may put healthcare systems across America on notice.

Mount Sinai  will  pay $2.95 million rather than go to trial over $844,000 in retained Medicaid overpayments. After a trial, the  big system could have faced treble damages as well as $4.9 million in False Claims Act penalties for the 444 payments in question.

Mount Sinai had asked a federal court in 2014 to throw out the case.

Modern Healthcare reported that a New York state comptroller audit in September 2010 “alerted the hospitals to potential overpayments caused by a computer glitch as well as a whistle-blower email in February 2011. But they didn’t refund all of the overpayments until March 2013, say federal and state prosecutors, well beyond the allotted window to return overpayments to the government.”

The  Fraud Enforcement Recovery Act and a 2010 provision in the Affordable Care Act give Medicare and Medicaid providers  60 days to repay overpayments from the time they are identified. After that,  the retained overpayments are subject to the False Claims Act and additional potential liabilities. Hospitals have strongly opposed these rules.

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