U.S. INTERVENES IN FALSE CLAIMS ACT SUIT AGAINST LOCAL DOCTOR, SURGICAL HOSPITAL AND REHABILITATION HOSPITAL

McALLEN, TX - The United States has filed a False Claims Act lawsuit against Raul Marquez, a McAllen area physician, and two hospitals that Marquez is affiliated with and has an ownership interest, Cornerstone Regional Hospital and Cornerstone Rehabilitation Hospital. The United States has joined in the lawsuit initially filed under seal, by a whistle blower by filing his own Complaint.

In its complaint filed on September 5, 2006, the United States alleges that Marquez, individually and through the defendant hospitals, made false claims and false statements to the United States in connection with claims for reimbursement submitted for his treatment of Medicare and Medicaid patients.

Raul Marquez is an orthopedic surgeon licensed to practice medicine within the State of Texas. He practices medicine at Orthopedic Surgery Center and Sports Medicine in Edinburg, Texas. Cornerstone Regional Hospital, a 14-bed surgical hospital, and Cornerstone Rehabilitation Hospital, a 25-bed inpatient rehabilitation hospital, are located within blocks of one another in Edinburg, Texas.

The civil complaint alleges that Marquez engaged in two schemes to defraud the Medicare program. In the first scheme alleged, Marquez, and his staff - at his direction - billed Medicare and Medicaid using Current Procedural Terminology - Evaluation and Management (CPT - E & M ) codes that did not accurately reflect the medical services provided to each patient during office visits in that (1) Marquez did not perform the services identified under the billed CPT - E & M code on the claim, or (2) he performed a simpler procedure for a less complex medical problem compensable at a lower rate of reimbursement.

Marquez, Cornerstone Regional Hospital and Cornerstone Rehabilitation Hospital are also alleged to have defrauded the Medicare program by improperly coding patient discharges. In this second scheme, Marquez and the defendant hospitals are alleged to have billed Medicare representing a patient was discharged to home when, in fact, the patient was transferred to an in-patient rehabilitation facility. Under Medicare's reimbursement policies, a surgical hospital often will receive a higher reimbursement if it discharges a patient home instead of to another inpatient facility for additional treatment.

The investigation leading to the filing of this lawsuit began in late 2002, when an orthopedic surgeon working with Marquez approached federal authorities and alleged that Marquez was defrauding Medicare and Medicaid by billing for services that were not rendered as represented.

The False Claims Act, pursuant to which this lawsuit was brought, empowers private citizens with knowledge of fraud against the United States to present those claims to the United States by bringing a lawsuit on behalf of the United States. If the allegations are substantiated, then the private citizen is entitled to share in any recovery.

The United States asserts that as a result of Marquez's alleged wrongful conduct, the United States paid Marquez, Cornerstone Regional Hospital and Cornerstone Rehabilitation Hospital hundreds of thousands of dollars to which they were not entitled. Through this lawsuit, the United States is seeking damages and penalties totaling more than $5.0 million under the False Claims Act and other legal theories of recovery, including payment by mistake, unjust enrichment, and fraud.

The investigation was jointly conducted by the Federal Bureau of Investigation, the Office of Inspector General for the Department of Health and Human Services, and the Texas Medicaid Fraud Control Unit. The case will be litigated by Assistant United States Attorney Andrew A. Bobb.