Mercy Hospital St. Louis in Creve Coeur has agreed to pay $365,000 to the U.S. government to settle allegations that it defrauded the Medicare system by improperly billing patients.

The settlement was announced today by the Justice Department, which listed Mercy Hospital as one of 14 hospitals across the country that have agreed to settle similar allegations of submitting false claims to Medicare.

It's the latest advance by federal health regulators, who contend that hospital overcharges drain critical funds from the Medicare program and increase health care costs.

The hospitals -- in Florida, Indiana, Missouri, Mississippi, New York, North Carolina and Washington -- agreed to pay the United States a total of more than $12 million to settle the allegations, the Justice Department said.  

The settlements resolve allegations that the hospitals overcharged Medicare between 2000 and 2008 when performing kyphoplasty, a minimally-invasive procedure used to treat certain spinal fractures that are often related to osteoporosis.

In many circumstances, kyphoplasty can be performed safely as a less costly outpatient procedure, but the government contends that the hospitals increased their Medicare billings by unnecessarily keeping patients overnight.

Mike McCurry, president and chief executive of the nonprofit Mercy Health, signed the settlement agreement in June. The Chesterfield-based Mercy system operates hospitals in Arkansas, Kansas, Oklahoma and Missouri.

McCurry was unavailable today for comment.

"Patients want reassurance that their health care provider is making treatment decisions based on the patient's best interests, not an interest in maximizing profits," Tony West, Assistant Attorney General for the Justice Department's civil division, said in a written statement. "By recovering taxpayer dollars lost to improper billing, this settlement will help support the vital public health care programs we depend on."

The Justice Department would not answer questions regarding the number or dollar amount of kyphoplasty procedures for which Mercy Hospital allegedly filed false claims from April 2001 to February 2008. 

"Under the False Claims Act, the government can recover up to three times the fraud," said Charles Miller, a Justice Department spokesman. "The figure may or may not represent three times the fraud."  

The original allegations against Mercy and the other hospitals remain under seal in federal court in New York.

The hospitals were named as defendants in a whistleblower lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the U.S. government and receive a portion of the proceeds of any settlement or judgment awarded against a defendant.

The suit was lodged in 2008 in U.S. District Court in Buffalo by Charles Bates and Craig Patrick, two former employees of Kyphon Inc.

In May 2008, Medtronic Spine LLC, the corporate successor to Kyphon, paid $75 million to settle allegations that the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as an in-patient procedure, even though in many cases it should have been done on an out-patient basis

The settling facilities also include Plainview Hospital in Plainview, N.Y. ($2.3 million); North Shore Syosset Hospital in Syosset, N.Y. ($193,000); North Mississippi Medical Center in Tupelo, Miss. ($1.9 million); Mission Hospital in Asheville, N.C. ($1.5 million); Wenatchee Valley Medical Center in Wenatchee, Wash. ($1.2 million); Community Hospital Anderson in Anderson, Ind. ($501,000); Gulf Coast Hospital in Fort Myers, Fla. ($173,000); Lee Memorial Hospital in Fort Myers, Fla. ($160,000); and Cape Coral Hospital in Cape Coral, Fla. ($73,000). In addition, four hospitals affiliated with Adventist Health System/Sunbelt Inc. in Florida will pay a total of $3.9 million.

Attorney General Eric Holder and Kathleen Sebelius, secretary of Health and Human Services, announced an initiative in May 2009 to jointly pursue investigations to reduce and prevent Medicare and Medicaid fraud.

Since January of that year, the U.S. government has recovered $6.6 billion in cases involving fraud against federal health care programs.

The federal probe was jointly pursued by the U.S. Attorney's office in Rochester, N.Y., the Justice Department's civil division, and the Office of Inspector General of the U.S. Department of Health and Human Services.