Englewood-based Catholic Health Initiatives and two Colorado hospitals were part of a $258 million federal settlement related to improper Medicare billing.

Nearly 500 hospitals, covered by 70 agreements, have agreed to settle whistleblower claims that they billed Medicare for cardiac procedures that did not qualify for coverage.

Nonprofit Catholic Health agreed to pay $7.8 million for improper billing at 17 hospitals including Mercy Medical Center in Durango. Phoenix-based Banner Health settled for $6 million for misbilling at nine hospitals including McKee Medical Center in Loveland and North Colorado Medical Center in Greeley.

Justice Department officials said the number of hospitals named in the “landmark” enforcement action made it the largest-such settlement under the False Claims Act.

The initial claims were brought seven years ago by a registered cardiovascular nurse and a Medicare-compliance consultant in Louisville, Ky.

The two alleged that hospitals were billing Medicare for inplantable cardioverter defibrillator, or ICD, procedures that did not meet National Coverage Determination guidelines. Under those rules patients that had coronary bypass surgery or angioplasty within 90 days or a heart attack within 40 days were not eligible for the procedure, Justice Department officials said.

Bryan Vroon, an Atlanta lawyer who represented the whistleblowers, said the case covered just under 10,000 procedures from 2003 to 2010. The procedures carried an approximate cost of $25,000 to Medicare, he said.

“I think it’s a major national problem of compliance,” Vroon said. “It’s just a window into an even larger problem and that is the extent of unnecessary care in this country and the costs associated with that care.”

He said since the Department of Justice started its investigation ICD procedures for Medicare patients have decreased by 28 percent, saving the program $2 billion.

Vroon’s clients were awarded $38.2 million in the case.

“Never before had we had a national investigation into whether Medicare patients were receiving science-based medicine in accordance with the Medicare coverage,” he said

A Duke University-led study released three years into the investigation found that patients who received non evidence-based ICDs had increased risk for disease and complications.

Catholic Health Initiatives officials said they were grateful that the matter was finalized.

“While the government’s focus was on the billing criteria, our primary focus has always been to ensure that our patients are provided with appropriate care, and we are satisfied that appropriate care was, in fact, provided to our patients,” according to an e-mailed statement from Catholic Health Initiatives. “We settled the billing issues in order to avoid protracted litigation with the government. We are thankful that this situation has been settled, our patients have received their treatment and they have not been financially impacted by this issue.”

Alicia Wallace: 303-954-1939, awallace@denverpost.com or @aliciawallace