June 7, 2002 — San Francisco Chronicle — Page A-27

Chronicle Staff Report

Sacramento — Catholic Healthcare West has agreed to pay $8.5 million to the federal government to settle accusations that some of its hospitals submitted false bills to Medicare and other federal programs.

The settlement was announced Tuesday. The 13 hospitals involved included St.

Mary’s Medical Center in San Francisco and Dominican Hospital in Santa Cruz, said Paul Scott, attorney for the former employee who filed the suit in a Sacramento federal court in February 1999.

Joseph Kimball, an analyst who prepared cost reports for CHW affiliate Mercy Healthcare Sacramento, accused the hospitals of making false statements in federal reimbursement claims. The government later intervened in the case.

As a whistle-blower, Kimball will receive $1.9 million of the settlement, plus $577,000 in legal fees and costs paid by the hospital chain, Scott said.

Catholic Healthcare West, the state’s largest nonprofit hospital chain, operates 42 hospitals in California, Arizona and Nevada. The company did not admit any wrongdoing and said the case involved complex and confusing federal regulations.

“We believe we interpreted those regulations fairly and reasonably, consistent with the interpretation followed by the courts and Medicare itself, and any errors were inadvertent,” William J. Hunt, a company vice president, said in a statement.