Ky. Hospital Pays $16.5M To End False Billing Claims


Ky. Hospital Pays $16.5M To End False Billing Claims
By Daniel Wilson

Law360, Washington (January 29, 2014, 4:37 PM EST) -- A unit of KentuckyOne Health Inc. has agreed to pay $16.5 million to resolve whistleblower claims alleging it billed Medicare and Medicaid for unnecessary heart procedures and violated the Anti-Kickback Statute, the U.S. Department of Justice announced Tuesday.

According to the government's allegations, a number of cardiologists associated with St. Joseph Health System Inc., owner of London, Ky.-based St. Joseph London Hospital, billed the government for numerous invasive cardiac procedures performed between January 2008 and August 2011 on Medicare and Medicaid patients who did not need them, in violation of the False Claims Act.

"We all rely on health care providers to make treatment decisions based on clinical, not financial, considerations," U.S. Attorney for the Eastern District of Kentucky Kerry B. Harvey said in a statement Tuesday. "The conduct alleged in this case violates that fundamental trust and squanders scarce public resources set aside for legitimate health care needs."

These unnecessary procedures, performed by doctors from the Cumberland Clinic — a physician group that had an exclusive arrangement to perform cardiology services at the hospital — included diagnostic catheterizations, coronary stents, pacemakers and coronary artery bypass graft surgeries, at a cost of between $10,000 and $15,000 for each procedure, the announcement claimed.

In addition to the $16.5 million payout, the deal includes a corporate integrity agreement between the hospital and the U.S. Health and Human Services' Office of Inspector General, requiring the hospital to undertake "substantial" internal compliance reforms, and conduct a third-party review of claims submitted to federal health care programs for the next five years, the DOJ said.

The settlement also resolves claims that the hospital violated the Anti-Kickback Statute and Stark Law — which bars doctors from referring government-funded patients to facilities they have a financial relationship with — by entering into sham "management agreements" with Cumberland doctors to induce them to refer patients to the hospital.

St. Joseph said in a statement Tuesday that it had not admitted to any violation of law in the agreement, but entered into the deal to "avoid the expense and uncertainty of prolonged litigation."

"We are pleased to have reached this agreement so that we can move forward," St. Joseph London President Greg Gerard said.

The hospital also noted that it no longer has a relationship with the doctors named in the suit and has since established a new leadership team — including the appointment of a corporate responsibility officer — as well as having begun to implement a number of procedures outlined in its agreement with the HHS OIG.

The settlement stems in large part from a qui tam whistleblower suit filed in March 2011 by three Lexington, Ky.-based cardiologists, as well as the voluntary disclosure by St. Joseph that one of its cardiologists, Sandesh Patil, had performed medically unnecessary coronary stent operations, the DOJ said. Patil was previously sentenced to 30 months in prison for health care fraud.

The whistleblowers — Michael Jones, Paula Hollingsworth and Michael Rukavina — will share a little over $2.4 million from the settlement, as well as $295,000 for fees and costs, with Kentucky nabbing about $366,000 for its share of Medicaid funds paid out to the hospital.

Andrew Beato, counsel for the relators, praised the deal in a statement Tuesday, saying the conduct of the doctors accused in the case was "unconscionable" and "a serious threat to public health and patient safety."

"The courageous actions of these whistleblowers helped bring to an end deplorable conduct that hurt patients and their families for no reason other than greed," Beato said.

The suit will continue against other defendants named in the complaint — Patil and fellow doctors Ashwini Anand and Satyabrata Chatterjee, as well as related clinics — as will a related criminal investigation, according to the government.

The relators are represented by Andrew M. Beato and Jed Wulfekotte of Stein Mitchell Muse & Cipollone LLP.

St. Joseph is represented by Daniel Reinberg of Polsinelli PC.

Counsel information for the doctor defendants wasn’t immediately available.

The case is U.S. ex rel. Jones, Hollingworth and Rukavina v. St. Joseph Health System Inc. et al., case number 6:11-cv-00081, in the U.S. District Court for the Eastern District of Kentucky.

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