SEBASTOPOL – Palm Drive Hospital disclosed that it failed to enter into proper contracts with physicians, resulting in reimbursement mistakes totaling more than $2.5 million from 2007 through February of this year.

According to a letter provided by the hospital, Palm Drive volunteered the errors to the federal Department of Health and Human Services and the Office of the Inspector General to show the following:

From January to December of 2007, $93,753 was improperly paid to physicians.

From January 2009 to December 2009, $446,097 was improperly paid.

From January 2010 through February of this year, $2 million was improperly paid.

The improprieties stem from a $500 monthly stipend program that the hospital had in place for its top physicians.

But the hospital failed to provide adequate contracts, per federal Stark Law regulations that require them.

β€œIn short, the elected chiefs of medical staff received a $500 monthly stipend from the hospital without entering into a formal written agreement signed by the parties,” according to legal papers.

In March, the hospital admitted to mistakenly billing Medicare for $2.3 million from 2007 to 2010. The hospital could be on the hook to repay both sums, which would total about $4.4 million. Alternatively, the federal government could choose to ask only for a portion of that money or none at all.

The federal government could take up to three years to determine what penalty, if any, the hospital will face.