The Queen's Medical Center has paid $2.5 million to settle two lawsuits alleging Hawaii's largest private hospital overcharged Medicare, the state's Medicaid program and TRICARE health benefits program for military dependents, the U.S. Attorney said Wednesday.

"Settlements such as this demonstrate yet again that submitting false claims to federal health care programs artificially raises health care costs and in turn takes from those who depend on these government medical programs," said Glenn R. Ferry, special agent in charge for the Los Angeles region of the Office of Inspector General, U.S. Department of Health and Human Services.

Ferry said his agency, working with federal and state law enforcement, "will continue to aggressively investigate and prosecute such fraud." 

John Nitao, vice president and general counsel of The Queen's Health Systems, said the medical center denies any wrongdoing.

"But after five years of discussions and negotiations with the government, (Queens) has agreed to settle this matter so that its resources may be spent on providing quality health care rather than on legal fees," he said in a statement.

The settlement grew out of civil lawsuits brought in federal and state court by two former pharmacy technicians under the federal and state False Claims Acts.

The former employees, who were given $400,000 of the settlement, alleged that the hospital submitted false bills for pharmaceuticals and billed federal programs for services provided by residents without the level of supervision required by federal rules.

U.S. Attorney Edward Kubo Jr. praised the whistleblowers, who were not identified in the settlement announcement, for their "courage in coming forward with the case." He said the False Claims Act allows the government to seek up to triple damages, plus penalties, for false and fraudulent claims submitted to government programs.

The government alleged that from Sept. 8, 1999, through Oct. 28, 2002, Queen's submitted false claims to Medicare, Medicaid and TRICARE seeking payment for the dispensation of anti-psychotic medications allegedly ordered by a psychiatrist. But it said the medications were prescribed by physicians without the prior knowledge of a psychiatrist.

Also, from July 1, 1999 through June 30, 2006, Queen's wrongfully submitted claims to Medicare, Medicaid, and TRICARE for services it represented were provided by teaching physicians when Queen's did not have the documentary evidence necessary to demonstrate that they were involved in the services to the degree necessary to support payment of the claims.

Under Medicare rules, Queen's was permitted to bill for certain services rendered by residents, provided that the residents were supervised by teaching physicians.

Queen's denied the government's contentions.

Besides the $2.5 million Queen's paid in the settlement, it also entered a corporate integrity agreement with the U.S. Department of Health and Human Services, Office of Counsel to the Inspector General.

Under the agreement, Queen's will maintain a compliance program designed to assure that its billings conform to all applicable program rules for a period of five years.

The hospital "pledged to continue its efforts to provide high quality health care while continuing to foster a culture of compliance with health care program rules," federal prosecutors said.

Located in downtown Honolulu, Queen's is licensed to operate with 505 acute care beds and 28 sub-acute beds. The medical center has more than 3,000 employees and over 1,200 physicians on staff.