January 30, 2014

Saint Joseph London to pay $16.5 million settlement

Second largest federal health care fraud settlement in eastern Ky. district

By Nita Johnson
Staff Writer

LAUREL COUNTY, Ky. — Three years after the first claim against the London hospital was filed for alleged unnecessary heart procedures, Saint Joseph London has reached a settlement with the United States government.

The settlement was reached Tuesday, in which the London hospital agreed to pay $16.5 million to resolve allegations that it submitted false or fraudulent claims to the Medicare and Kentucky Medicaid programs.

When hundreds of lawsuits were filed alleging unnecessary cardiac procedures were being performed at Saint Joseph London by a group of cardiologists, the United States Attorney’s Office conducted an investigation into the issues.

The investigation revealed between Jan. 1, 2008 and Aug. 31, 2011, these cardiologists teamed together and performed “invasive cardiac procedures” on patients covered under Medicare and Medicaid. The procedures were not medically needed and violated the False Claims Act because the patients did not meet the guidelines under what is termed as “medically necessary.” Procedures included coronary stents, pacemakers, coronary artery bypass graft surgeries (CABGS) and diagnostic catheterizations. The standard reimbursement for medical procedures such as heart stents ranges between $10,000 and $15,000.

The settlement also resolves claims that Saint Joseph London teamed with these heart doctors in 2008 to provide the cardiac care for the hospital’s patients, thus violating the federal Stark Law and Anti-Kickback Statute. The agreements between the hospital and the doctors arranged for the doctors to refer their patients to the hospital. The government claims Medicare and Medicaid should not pay for claims that arose from the improper financial arrangements between the doctors and the hospital.

“We all rely on health care providers to make treatment decisions based on clinical, not financial, considerations,” said U.S. Attorney Kerry B. Harvey. “The conduct alleged in this case violates that fundamental trust and squanders scarce public resources set aside for legitimate health care needs. We will use every available tool to protect our federal health care programs and the patients who they serve.”

Saint Joseph London also agreed to undergo substantial internal compliance reforms and commit to a review of its claims to federal health care programs by a “third party,” not associated with the hospital, for the next five years.

"Cases such as this threaten both the health of patients and the financial integrity of the Medicare and Medicaid programs," said Derrick L. Jackson, special agent in charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. "This settlement is another example of the Office of Inspector General’s commitment to protecting our beneficiaries and to recovering any money that has been improperly paid as a result of medically unnecessary procedures."

This settlement is the second largest health care fraud settlement in the Eastern District of Kentucky, which includes 67 counties.

The settlement stems from a whistle blower complaint filed by three Lexington cardiologists, who, under the False Claims Act, can share in the settlement proceeds because they drew attention to the situation. The three doctors named in the investigation will receive $2.5 million under the agreement. Saint Joseph London also participated in the “whistle blowers” by reporting that Dr. Sandesh Patil was performing medically unnecessary coronary stents. Patil was named in a federal investigation for health care fraud, pled guilty and was sentenced to 30 months in prison.

“Hospitals that place their financial interests above the well-being of their patients will be held accountable,” said Stuart Delery, assistant attorney general for the Civil Division of the United States Dept. of Justice. “The Department of Justice will not tolerate those who abuse the public health care programs to which we all contribute and on which we all depend.”

Since Medicaid is distributed from the federal government to individual states, the Commonwealth of Kentucky will also receive $365,851 — its share of the government’s recovery of Medicaid funds.

Through the agreement, Saint Joseph London does not admit any guilt, but simply that it will settle financial issues from the alleged Medicaid and Medicare fraud. The agreement does not, however,  settle the individual lawsuits filed in Laurel Circuit Court against the hospital.