Putnam Community Medical Center: Sleep Lab Bills Backed an Insider’s Account

Putnam Community Medical Center agreed to pay $1 million in a sleep center settlement over allegations of inadequate physician supervision. A former sleep-center employee brought the case, connecting knowledge of the lab’s work with actual Medicaid claims. The court allowed the sleep-lab diagnostic claims to proceed and dismissed the downstream equipment claims.

The Justice Department announced the settlement on October 26, 2023, concerning the hospital’s now-closed sleep center in Palatka, Florida. The United States and Florida alleged that the hospital provided diagnostic testing without adequate physician supervision. In the Justice Department’s allegation, we pay for the test while the hospital shortchanges its supervision.

Which Putnam Claims Survived the Partial Dismissal?

Putnam’s federal and Florida sleep-lab diagnostic claims survived for the period from December 2013 through February 2019. In its October 26, 2022 order, the federal court in the Middle District of Florida dismissed the claims outside that period, the claims outside the sleep lab, and the downstream equipment claims. The settlement agreement identifies Medicare, Medicaid and TRICARE in the covered allegations.

What Did the Employee’s Evidence Connect?

The employee connected firsthand sleep-lab knowledge with examples of claims actually submitted to Medicaid. As the court described the complaint, the employee worked as a polysomnography technologist from December 2013 to May 2015 and then as sleep-lab manager from May 2015 to March 2019. The court also described internal reports to management and representative Medicaid claims from 2015 through 2018.

Those roles gave the employee a view of the testing operation, while the claim examples connected that account to a payer. The court allowed the supervision claims to continue on the combination of workplace knowledge and submitted claims.

That connection also explains the narrower result for other departments and dates. The court described a lack of comparable knowledge or claim data for those allegations. Working inside the hospital gave the employee useful evidence about the sleep lab. The court examined separately what supported claims elsewhere in the business.

Does an Invalid Sleep Test Automatically Establish a False CPAP Claim?

In Putnam, it did not: the court dismissed the downstream equipment claims because the example offered did not identify the government as the equipment insurer. The sleep-lab claims and the equipment claims reached different results within the same case.

The diagnostic and treatment businesses meet at the report. A sleep test produces a recording, scoring and a physician’s interpretation, which can then support a treatment order. The durable medical equipment supplier’s claim is a further transaction, with its own service, payer and payment record.

That separation matters to an insider who sees an equipment order following a questionable study. The order, the report sent to the treating practice and the supplier’s claim can describe different parts of the same patient’s care. Putnam’s equipment example left the identity of the government payer unconnected, even though the employee had Medicaid claim examples for the lab’s testing.

Areté Sleep shows a different outcome at that handoff. In its May 26, 2011 announcement, the Justice Department described a settlement covering allegations of Medicare claims for tests performed by uncertified technicians and equipment derived from those tests. The Areté resolution reached both testing and equipment. Putnam’s settlement followed dismissal of the equipment claims.

Does a Physician Have to Be at the Bedside Throughout a Study?

A physician does not have to be at the bedside throughout every sleep study. Medicare’s sleep-clinic guidance permits coverage of some diagnostic testing without direct physician supervision. The supervision required depends on the service and setting, and the physician’s responsibility is separate from the technician’s attendance.

An attended overnight study involves personnel acquiring and monitoring the physiological signals. General physician supervision concerns direction and control, including responsibility for training and equipment maintenance, without requiring the physician’s presence during performance. Interpretation is another job: the physician reviews the required data and supplies the diagnostic report. Attendance, supervision and interpretation each describe work that can leave a different record.

Putnam’s settlement described alleged failures to meet Medicare supervision regulations and local coverage requirements for diagnostic sleep testing. A staffing roster, a supervision arrangement and an interpreting physician’s report speak to different parts of that allegation. We connect the work to the duty attached to the particular claim, so a broad staffing concern becomes a precise account of what the payer was told and what the lab supplied.

Pinnacle Health Care illustrates the separate interpretation issue. In a joint federal and Washington resolution, the Justice Department alleged that clinics billed for both technical and professional sleep-study work while supplying only the technical component, with an outside physician completing and billing the interpretation. That allegation concerns who performed the physician’s work and who billed for it. Putnam’s surviving allegation concerned the supervision of the testing itself.

The Putnam Settlement and Whistleblower Share

The filed settlement agreement allocated the whistleblower a 30% share. The employee pursued the case after the United States and Florida initially declined to join, and the agreement later provided for government participation to complete the settlement. More broadly, a whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

The U.S. Attorney’s Office for the Middle District of Florida led the Putnam investigation, working with the HHS Office of Inspector General and the Defense Criminal Investigative Service. The employee supplied the inside account that began the case. The agreement resolved the supervision allegations that remained after the court’s narrowing.

The Sleep-Lab Records Behind a Government Claim

The ordinary testing workflow produces records at each handoff: the treating order, staff assignment, raw recording, scoring, interpretation and claim. In health care billing, the claim compresses that work into a service description, billing identity, component, date and units. A payment or correction record then shows what happened to the request for money. Someone who knows the lab may be able to explain a discrepancy that the claim alone conceals.

Different employees can see different discrepancies. A technician may know the actual attendance and supervision arrangements, a scorer may know the recording and report history, and a billing employee may know which program received the charge. Internal reports can also show what management was told. We work with the insider’s knowledge to connect those records to the alleged shortfall in the service billed.

You Know Who Supervised the Study

You may know who actually supervised a hospital’s sleep studies and how that differed from the service it billed. Speak to one of our Whistleblower Experts about what you saw. We connect your knowledge to the claims, bring in healthcare fraud whistleblower lawyers experienced in hospital diagnostic billing, and stand beside you to build your strongest sleep center whistleblower case.