Vanderbilt University Medical Center is paying $6.5 million to settle a yearslong case over Medicare fraud allegations.

Three physicians formerly employed by the health system claim that VUMC's surgery scheduling practices from 2003 to 2011 violated Medicare billing regulations. The case was filed under seal in 2011 and became public in 2013.

Neither the federal government nor the state government intervened in the process. But under the False Claims Act, Medicare will receive most of the money from the settlement. Some will go to state agencies. Whistleblowers also receive a portion of settlements.

VUMC's current annual operating revenue is $3.8 billion.

The settlement, as in other cases over alleged Medicare fraud, is not a determination of liability, and the claims brought by the whistleblower remain allegations.

“(VUMC) always disputed the validity of the allegations and made this decision for business reasons," said Michael Regier, general counsel at VUMC. "I think this really, from the perspective of the medical center, is really a decision to move forward.”

As part of the settlement, VUMC agreed to bring in a third-party consultant to evaluate the structure and effectiveness of its compliance program as well as compliance and operating policies regarding some clinical areas.

David Stone, the senior managing partner at Stone & Magnanini in New Jersey who represented the anesthesiologists who brought the case, said this component was "very important to my clients."

The case was originally filed in New Jersey and later moved to the U.S. District Court for the Middle District of Tennessee. The settlement was paid earlier this week, and a document to dismiss the case is being filed today.

Dave Garrison, partner at Barrett Johnston Martin & Garrison, represented the whistleblowers along with Boies Schiller.

VUMC worked with outside counsel: Mark Rush at K&L Gates and Bass Berry & Sims.

Indications that Trump administration will continue Obama's initiatives to chase fraud

Federal Medicare fraud cases are common, and on the upswing as the government tries to recoup money and encourage better billing practices.

It's a steady stream of criminal and civil allegations brought by the U.S. Department of Justice and whistleblowers, said Travis Lloyd, partner at Bradley Arant Boult Cummings in Nashville.

It's not unheard of for cases to extend for years. The process is time consuming, expensive and requires vast amounts of data and documentation.

The government has taken on more Medicare and Medicaid fraud cases in recent years. An initiative under former President Barack Obama increased activity, and Lloyd said actions by the Trump administration indicate the trend will continue.

Cardinal Health recently agreed to a $2.71 million Medicare fraud allegation settlement for one of its subsidiaries that was filed in the Middle District of Tennessee.

The government makes $5 for every $1 it spends on these cases, according to a recent report from the DOJ and U.S. Department of Health and Human Services. But state and federal agencies don't always get involved — such as with the civil suit against VUMC.

Trump's budget proposed increasing the budget for the health care fraud and abuse program by $70 million — a rare increase in a budget that proposed cutting the HHS budget by $15 billion.

"While there may be a big picture trend toward reducing regulation or rule-making activity ... these are sort of early indications from the Trump administration that they are singing the same tune (as Obama) on that front,” Lloyd said. "It’s a reality under which health care providers must operate.”

Reach Holly Fletcher at hfletcher@tennessean.com or 615-259-8287 and on Twitter @hollyfletcher.