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Upcoding Blues: $14.9 Million False Claims Act Settlement in Fraudulent Billing Qui Tam Lawsuit

June 13, 2024. Thanks to the efforts of a whistleblower, Bluestone Physician Services of Florida LLC, Bluestone Physician Services, P.A., and Bluestone National LLC have agreed to a $14.9 million settlement to resolve allegations of fraudulent billing and upcoding to government-sponsored health insurance programs. The settlement highlights the critical need for integrity in healthcare billing practices and underscores the ethical implications of these actions. A whistleblower, who was a former General Manager for one of the company’s state markets, reported this fraud via a qui tam lawsuit. They will receive $2,831,380 or approximately 19% of the settlement, as a reward.

Bluestone, which operates in Florida, Minnesota, and Wisconsin, allegedly submitted false claims to Medicare, Medicaid, and TRICARE for Evaluation and Management (E&M) services related to chronic care patients in assisted living and other care facilities. The allegations cover a period from January 1, 2015, through December 31, 2019, during which Bluestone allegedly submitted claims for two E&M codes—the domiciliary rest home visit code for established patients (99337) and the chronic care management code (99490)—that did not accurately reflect the level of service provided, as part of their upcoding scheme.

The federal government will receive $13,842,482 of the settlement, while the states of Florida and Minnesota will receive $1,059,518. Additionally, as part of their five-year Corporate Integrity Agreement (CIA) with the Health and Human Services Office of Inspector General (HHS-OIG), Bluestone agreed to launch a compliance program and submit its Medicare claims to an Independent Review Organization.

The Whistleblower

This civil settlement resolves claims brought under the qui tam provisions of the False Claims Act by Lisa Loscalzo, the former General Manager for Bluestone’s Florida market. Whistleblowers who report fraud under the qui tam provisions of the False Claims Act can receive between 15-25% of the government’s recovery. Ms. Loscalzo will receive $2,831,380 as part of the settlement.

What is Upcoding?

In the healthcare industry, billing codes are used to bill Medicare or Medicaid for patient services. Each code corresponds to a specific procedure or diagnosis, and the government uses these codes to determine reimbursement amounts. Upcoding occurs when a healthcare provider bills for a more serious or expensive procedure or diagnosis than what was actually performed or diagnosed. This practice increases medical expenses for the government without benefiting the patient and is both illegal and unethical.

The False Claims Act

Upcoding and unbundling (billing separately for services that should be billed together) are violations of the False Claims Act. This federal law creates liability for any person who knowingly submits false or fraudulent claims to the government. Since Medicare and Medicaid are federally funded programs, false submissions of healthcare claims can lead to severe financial penalties and legal consequences.

Impact on Healthcare Costs & Patients

When healthcare providers engage in upcoding and fraudulent billing, it leads to increased costs for government healthcare programs like Medicare and Medicaid. These increased costs are often passed on to taxpayers and can result in higher healthcare costs or reduced quality of care for patients.

Upcoding can also result in harm to patients. When patients receive inaccurate diagnoses or unnecessary treatments that are billed at higher rates, it constitutes an abuse of vulnerable patients. This can lead to physical harm and a loss of trust in the healthcare system. Upcoding and fraudulent billing not only undermine the integrity of government healthcare programs but also harm patients and increase healthcare costs for everyone.

Importance of Whistleblowers

Many patients do not understand billing codes, making it difficult to spot healthcare billing fraud from the outside. Employees of healthcare providers who come forward as whistleblowers (qui tam relators) play a crucial role in exposing healthcare fraud and assisting the government in recovering defrauded funds.

If you suspect fraudulent billing practices in your organization, consider speaking up. Whistleblowers are essential in maintaining the integrity of our healthcare system and ensuring that resources are used appropriately. Under the False Claims Act and other fraud fighting statutes, whistleblowers have protection from retaliation and can also be rewarded.

If you would like to report upcoding fraud and fraudulent billing, you can contact attorneys at Tycko & Zavareei LLP. Eva Gunasekera and Renée Brooker are former officials of the United States Department of Justice and prosecuted whistleblower cases under the False Claims Act. Eva was the Senior Counsel for Health Care Fraud. Renée served as Assistant Director at the United States Department of Justice, the office that supervises False Claims Act cases in all 94 United States District Courts. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Eva Gunasekera at [email protected] or contact Renée at [email protected] (tel.: 202-417-3664). Visit Tycko & Zavareei LLP’s website for whistleblowers to learn more at

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Our experienced qui tam attorneys are available for a confidential, no-cost, no-commitment, initial evaluation of your case. Call us now at (202) 973-0900, or begin the process by completing our Confidential Case Evaluation Form.
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