A woman with the lyrical name of Swannee Rivers opened her front door one day in 2002, and there stood two FBI agents. Finally! she thought, her heart racing. "You don't know how long I've been waiting for this day," she told them later, sitting on the long couch in the rec room of her split-level home in Renton. She began to pour out the story she would later tell a 2003 federal grand jury, detailed here for the first time: how University of Washington doctors routinely falsified Medicare insurance bills, how office workers were told to forge doctors' names on billing documents, how bills were "re-created" for procedures done as long as seven years earlier, how "surprise" visits by federal auditors were quietly announced by UW officials weeks in advance, and how everybody—everybody—at UW Physicians, the medical school's billing office and nexus of the fraud scheme, knew UW had been methodically cheating the government, and taxpayers, for a decade.
Rivers, who started at UWP in 1982, described to the agents a fraudulent system that seemed to go to the top of the medical school. "I tried to tell them," she said. "We know," Rivers remembers one of the agents saying. "We'd like to read something to you." He pulled out a copy of the eight-page resignation letter, written in 1995, that she had given to the vice president in charge of the billing office. The FBI had found the letter in a raid on UWP files. It explained how Rivers was leaving a job she loved because she could no longer stomach the billing practices, outlined in agonizing detail.
Rivers told the agents the vice president promised changes. He was later seen reading the letter to her manager, laughing. Recalling this for the FBI, Swannee Rivers almost came to tears in front of the agents. Seven years late, someone had finally heard her distant whistle. Over the next two years, helped by her and others' testimony—and, in particular, led by the efforts of chief whistle-blower Mark Erickson—federal investigators and prosecutors would expose and collapse UW's historic Medicare/Medicaid false-billing scheme. It would lead to the criminal convictions of two doctors, neurosurgeon H. Richard Winn and kidney specialist William Couser, cost the school as much as $25 million in legal fees, and leave UW facing an extraordinary $35 million fine it must pay by the end of this week—a record amount for Medicare fraud by a university.
Erickson, 35, who, like Rivers, tried to find a cure within the system, filed a sealed whistle-blowers' lawsuit in 1999 and became an FBI informant. "Some of these fraudulent practices were so well entrenched at UWP they became almost standard business practice," Erickson says. Sending charts back to doctors to have them "post-documented" to justify unwarranted charges, he said, was even detailed in some job descriptions. Under the False Claims Act in which a whistle-blower shares in any fines, Erickson is about to receive $7 million for his effort, netting about half that amount after taxes and legal costs. He calls the civil fine and plea-bargained criminal cases only "a partial repayment" of what UW wrought. "I do believe that the [U.S. attorney's] office was put in a difficult position and had to mitigate the effect on the community," Erickson says. Prosecutors were creative with their settlement plans, "but they may have been too lenient." The University of Pennsylvania was fined a then-record $30 million in 1995 for similar violations, based on treble damages of $10 million in overbilling, as determined by a federal audit process known as PATH—Physicians at Teaching Hospitals, also used in the UW case. UW's settlement agreement, says Erickson, "doesn't even come close to single damages" for its overbilling, estimated to be more than $50 million. (UW calls such a figure an exaggeration.) "I believe that there are many more doctors in many departments who could have found themselves facing criminal charges," Erickson says.
When she resigned in 1995, Swannee Rivers told managers at UW Physicians about falsification of bills and forged doctor signatures.
The U.S. investigation burst into scandal when word of the probe got out in 2002. But the damage might have been avoided had UW officials taken Rivers' tell-all letter to heart or reacted to Erickson's persistent complaints about fraud. Instead, according to court documents and interviews, UW doctors, administrators, and billing managers, with at least tacit approval of some top officials, continued bilking the public like crooked car dealers, lying about their services and prices. Lawbreaking was justified: In their minds, the government's insurance reimbursements were inadequate and unfair. They knew what they were doing, prosecutors say. Incriminating documents were shredded and workers were warned not to break ranks. "Butt out," is what Erickson says he was told. You just don't go around talking about billing for medical procedures "performed" by physicians who were in Europe at the time.
Despite the public impression today, the fraud was not isolated among a few doctors, Rivers says as we drive though the rain en route to her child's Christian preschool in Maple Valley. And though school officials say the scandal is now behind them, Rivers doubts it's over. Certainly it shouldn't be, she says. "They got a couple doctors and the UW will pay a civil fine without even admitting wrongdoing!" She was getting excited and braked late for a stop sign. "I don't know how anyone at the top couldn't know this had gone on."
Paul Ramsey, longtime dean of the UW School of Medicine, recently claimed that "most of these errors were innocent mistakes" and said the fraud wasn't widespread. "Our physicians and personnel in the practice plans were working very hard to comply with the complicated billing regulations," he said. When I bring this up at the stop sign, Rivers appears to be smiling as she waits for traffic. The regs are complicated, and not all doctors were complicit in the fraud, she says. "All I can say is that I understand there may be more charges. I hope so. I want to see those names in the newspaper." Emily Langlie, spokesperson for U.S. Attorney John McKay in Seattle, says the UW case is "essentially concluded." But some UW faculty members also want more action. One doctor says there was such turmoil within the med school that death threats were made against Dr. Winn, the prominent neurosurgeon whose $500,000 Medicare reimbursement is being paid by UW by dipping into the UWP funding pool from which doctors are paid (see "Brain Damage," Jan. 15, 2003). Winn, disliked by some for his hard-nosed demeanor, is seen by others as UW's scapegoat, sacrificed with Couser by the med school and Board of Regents in a bargain for an end to the criminal side of the investigation. "If Winn had gone to trial," says a doctor who asked not to be named, "it would have been a bloodbath for the UW." Instead, the brain surgeon fell on his golden sword. In return for pleading guilty and resigning from his job, Winn got a promise of up to $3.7 million in future payments from UW.
This week, med-school dean Ramsey said he first heard allegations of billing fraud in 1998, years after Rivers said the fraud was in full swing and three years after she went to her bosses with the resignation letter. Ramsey told The Seattle Times he received a 1998 letter from a UW doctor claiming bills were forged and falsified—an in-house complaint similar to those repeatedly made by Rivers and Erickson to their bosses. But Ramsey said an in-house investigation— presumably including UW Physicians—turned up no wrongdoing. This was about the same time a frustrated Erickson prepared to go to the FBI with the full story, which, both he and Rivers say, had long been sitting there waiting to be uncovered.
Swannee Rivers' 1995 resignation letter (above), and the 2004 consent decree (below) articulating the $35 million settlement between the University of Washington and the Justice Department."
In a new UW Faculty Senate report obtained by Seattle Weekly, Ramsey is being asked to present a fuller, more "transparent" picture of the medical school's handling of the scandal. "Some faculty have raised concerns about the legality of using funds from a public agency for the [Winn] settlement," the report states, "and many question why such a large settlement was made to secure the resignation of a faculty member whose alleged conduct, if proven, would have justified termination for cause." Winn, accused of billing fraud, pleaded guilty to the lesser charge of obstruction of justice. "That apparent paradox has generated suspicions that the settlement payments might have been made to cover up other, more widespread problems beyond the alleged billing errors and related misconduct of one or two individuals." The faculty report also recommends seeking a provost's opinion on the legality of the payment and suggests the state auditor review UWP's finances over the past five years. The report awaits further action by the Senate, the faculty's legislative body.
UW Athletic Director Barbara Hedges, the head of her department, retired in the wake of recent, lesser scandals over betting involving coaches and drug use by athletes, one doctor points out. "What makes the med-school leadership so sacred?"
As Rivers, 39, a work-at-home mom and writer, remembers it, UWP "was a fabulous company in the beginning." She was posted in the billing office at the University of Washington Medical School, and later at Harborview Medical Center, which is operated by UW. UWP's headquarters is on Eastlake Avenue East and is associated with two other billing groups, Children's (Hospital) University Medical Group and the Association of University Physicians, which followed similar billing procedures. (All were held liable in the federal case.) "You walk in and you're 17 and you have all these benefits—I was in heaven," Rivers says. She was an "abstractor" on the Medicare desk when she was hired, compiling records for billing. "I had a good manager, but within a few years it was changing, under another manager, then another manager, around 1986. There was more pressure to get things done faster. And then pressure to just do what you're told and not ask questions. Our [last] manager used to tell us, 'Well, anyone off the street can come in and do your job.' She would tell us that almost every day. That beats you down. You start to believe it. If you spoke up, you were going to pay the price."
Neurosurgeon H. Richard Winn had to repay Medicare $500,000, but UW doctors, ultimately, are picking up the bill. (University of Washington)
In the next few years, she married and had the first of two children. She tried to overlook questionable practices. Her manager told her that when a record was incomplete, "just pick a doctor and bill it," Rivers recalls. She witnessed a doctor hand over a billing document, take it back, and, after changing it, say, "They'll pay more for that procedure." (Prosecutors would later describe such practices as illegal "systematic upcoding.") Regularly alerted that federal Health and Human Services auditors were due and told what kind of reports they'd be auditing, office workers would quickly compile records that had been incomplete or had to be "re-created." Auditors were looking for records that would prove procedures were actually done and that Medicare reimbursement was justified. "We got—or created—documents that were five, six, seven years old," Rivers says, discussing testimony she gave to the grand jury. "That wasn't uncommon at all; that was done all the time." UW had discovered it could legitimately recover costs for earlier procedures it hadn't billed for but abused that process by submitting exaggerated and fictitious charges, prosecutors said. "We always knew the auditors were coming—that's something I stressed in front of the grand jury," Rivers says. "I told them, 'We looked surprised, but we always knew.'"
False billing became a culture at UWP, Rivers says. One billing-compliance officer "knew what was going on. And she did nothing about it. Another worker told me, 'Just keep your mouth shut. I want to retire from here.'" There was little attempt in the office to hide what was being done. Rivers recalls a billing manager slapping a document on a co-worker's desk and saying: "I don't want you to send this back to the physician because it will take too long, and he probably will never sign it anyway. Just sign his name on the report, and send it to the main office." And it was done.
In 1991, when Mark Erickson came to work at UWP, Rivers says, "he was pulling me and others aside and saying, 'What is going on here; why is this documentation missing?' and saying, 'We would have never gotten away with this at the last place I worked.' And I told him, 'There is the right way, and there is the UWP way.'"
Rivers several times relayed her concerns to her boss' boss, the vice president, she says, without results. Watching this, Erickson grew to feel something dramatic had to be done, she says. "I remember he called me one day in 1995, and we met in the lobby. By this time I could just barely stand it, I was getting physically ill from the place. And he said we have to get more proof. We were billing for physicians who weren't even in the country! I said, 'Are you crazy? We'll get fired.' He said I didn't have to do anything, just be the extra set of eyes. And he said he was going to start going into the paper recycle box—this is before they began using shredders—and he could get the original documents, billings, memos, everything. He had a special folder he was keeping everything in. He'd come over and use the copier, and I would keep watch—our manager had a certain walk, a sound to her shoes, which used to just freeze us up when we heard it, and I would listen for her. Mark said he would, if necessary, go to the FBI. And I said, 'Oh sure, the FBI.' I never believed him."
In November 1995, Rivers gave reform one last shot in her letter of resignation. "I told them people are frightened, that it was just eating everyone up and that I couldn't stay, but here is what is wrong and what they could do about it. The vice president promised me he would put an end to it. A couple days later, a former co-worker told me the vice president showed the letter to my manager. They were laughing, and then he took her out to lunch!" Today she knows that Erickson, after writing U.S. health officials in 1997 and getting no action, filed the False Claims lawsuit and indeed went to the FBI.
Kidney specialist William Couser, the other physician who pleaded guilty in the fraud case.
By 1999, Erickson was secretly tape-recording meetings with UWP officials. He has no regrets today and doesn't necessarily see Winn and Couser as fall guys. "I don't feel they meet the true definition of scapegoats," Erickson says now, "as they clearly were aware of what was transpiring in their departments." The fraud "was systemic and encouraged," he says. Some med-school departments billed under their own unique criteria, leaving standard lower-cost charging codes off their billing cards and fee sheets so higher revenues could be generated. Some doctors, he says, were "told by their administrators to meet quotas by seeing so many patients in a certain time frame and padding notes." In other instances, notes were just flatly falsified. According to his recently unsealed whistle-blower complaint, joined by federal prosecutors, top UW medical officials "made a conscious and deliberate decision to ignore the facts before them." Erickson's attorney recently called the fraud a "criminal enterprise." UW attorney David Robbins denies all of Erickson's allegations. The Seattle Times recently renewed its 2003 motion in U.S. District Court seeking to unseal all undisclosed documents in the case. "The public has a right to know what transpired in this litigation," says Times attorney Jessica Goldman. The court has yet to rule.
Erickson says the office manager, the one Rivers also speaks of, told a group of office workers that billing procedures "may very well be fraudulent" but they would follow them nonetheless. "Most people were living paycheck to paycheck and were reluctant to come forward, as they had a fairly good idea of how management would respond," he says. "I informed them that billers could be held just as liable as doctors and asked them what would happen if investigators ever showed up. [They] responded, 'I'll just play dumb and say I was doing as I was told.'"
Rivers says she took that route until she could no longer endure the wrongdoing. "That place, it just traumatized so many of us," says Rivers, who is writing a book about her role, in part as therapy. "When I read about Mark recently, about winning his big reward, I called him and I just cried. He stopped and said, 'Are these happy tears?' And I said, 'Yes, happy that it's beginning to come out about what we all went through.' It was the first time in almost 10 years I felt really free."