Accounting & Tax

Ernst & Young Fined $1.5 Million

''It is the duty of an independent reviewer to be alert to abuse,'' said a government attorney, and not to remain ''deliberately ignorant.''
Stephen TaubJuly 22, 2004

Ernst & Young has agreed to pay the U.S. government $1.5 million to settle claims that it provided bad advice to nine hospitals that wound up submitting false claims to Medicare, according to the U.S. Attorney’s office in Philadelphia.

Prosecutors had alleged that E&Y’s health-care consulting division “knowingly caused” the hospitals to submit more than 200,000 claims for payment between 1991 and 1997 for outpatient blood tests that were performed but not medically necessary.

“This settlement should provide a wake-up call not only to health-care providers but also to the consultants on whose advice they rely,” said U.S. Attorney Patrick Meehan, in a statement. “It is the duty of an independent reviewer to be alert to abuse,” he continued, and not to remain ” ‘deliberately ignorant.’ Those who market themselves as experts have the responsibility to provide accurate information. The integrity of the Medicare systems depends on it.”

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As part of the settlement, Reuters reported, Ernst & Young denied wrongdoing and stated that it reached the settlement to put the case behind it.

According to the Associated Press, the Big Four firm also noted that it was paid a flat fee for its consulting work and so had nothing to gain if hospitals found a way, using the firm’s advice, to boost revenues.