Mary­land case shows feds eye­ing physi­cian con­tracts

Modern Healthcare - - Front Page - Gregg Blesch

Mary­land case shows feds’ in­ter­est in physi­cian con­tracts

St. Joseph Med­i­cal Cen­ter in Towson, Md., of­fi­cially moved be­yond a fed­eral probe of its deal­ings with a group of car­dio­vas­cu­lar sur­geons. But the $22 mil­lion set­tle­ment doesn’t set­tle the un­der­ly­ing mess, which has sown a thicket of lit­i­ga­tion.

The U.S. Jus­tice Depart­ment’s piece of it, mean­while, sig­nals the govern­ment’s grow­ing in­ter­est in scru­ti­niz­ing physi­cian con­tracts.

The 332-bed hos­pi­tal, part of Den­ver-based Catholic Health Ini­tia­tives, agreed to pay $22 mil­lion last week to set­tle al­le­ga­tions that its con­tracts with a car­di­ol­ogy group cre­ated kick­backs and pro­hib­ited re­fer­rals. St. Joseph of­fi­cials an­nounced an “agree­ment in prin­ci­ple” with the govern­ment in July 2009, two months af­ter con­firm­ing that three top ex­ec­u­tives had been placed on ad­min­is­tra­tive leave to avoid con­flicts of in­ter­est with an in­ves­ti­ga­tion.

The govern­ment al­leges that St. Joseph en­tered con­tracts with MidAt­lantic Car­dio­vas­cu­lar As­so­ci­ates, Pikesville, Md., that were “con­duits” for kick­backs for bring­ing lu­cra­tive car­diac pro­ce­dures to the hos­pi­tal from 1996 to 2006, ac­cord­ing to the agree­ment en­tered in U.S. District Court in Bal­ti­more.

The set­tle­ment, in which St. Joseph ad­mits no li­a­bil­ity, also re­solves al­le­ga­tions that the hos­pi­tal billed Medi­care and Med­i­caid for med­i­cally un­nec­es­sary pro­ce­dures per­formed by Mark Midei, who had been a part­ner at MidAt­lantic and was em­ployed by St. Joseph from Jan. 1, 2008, to May 12, 2009.

St. Joseph Pres­i­dent and CEO Jef­frey Nor­man said in a writ­ten state­ment that the hos­pi­tal co­op­er­ated with the govern­ment. “Med­i­cal cen­ter lead­er­ship op­er­ated from the be­lief that a co­op­er­a­tive and trans­par­ent ap­proach guided by its faith-based sys­tem best served the in­ter­ests of its pa­tients and com­mu­nity and re­flects our mis­sion and val­ues.”

The agree­ment lists a few con­tracts for ad­min­is­tra­tive ser­vices and med­i­cal di­rec­tor­ships iden­ti­fied as a prob­lem. One de­scribed as typ­i­cal was a con­tract for EKG read­ing, in which MidAt­lantic was paid “well in ex­cess” of what the hos­pi­tal was re­im­bursed by pay­ers. MidAt­lantic al­legedly so­licited the terms to cover the salaries of two nurse prac­ti­tion­ers with no role in read­ing EKGs.

The govern­ment’s in­ter­est was trig­gered by a whis­tle-blower law­suit filed by physi­cians in a com­pet­ing group, Car­diac Surgery As­so­ci­ates. The set­tle­ment re­solves their al­le­ga­tions per­tain­ing to St. Joseph. Nei­ther MidAt­lantic nor Midei are par­ties to the set­tle­ment, and the Jus­tice Depart­ment re­quested that the com­plaint and the iden­ti­ties of 53 ad­di­tional de­fen­dants re­main un­der seal to pro­tect an on­go­ing in­ves­ti­ga­tion, ac­cord­ing to court records.

Health­care lawyer David Rob­bins, a share­holder in Ben­nett Bigelow & Lee­dom in Seat­tle, said the govern­ment clearly has a grow­ing in­ter­est in pars­ing physi­cian con­tracts in fraud cases, not­ing that the Jus­tice Depart­ment in June won a case against Tuomey Health­care Sys­tem in Sumter, S.C. “It seems that this is a new trend of lit­i­ga­tion where they re­ally are try­ing to take apart or scru­ti­nize whether com­pen­sa­tion paid is in­deed fair mar­ket value.”

Car­diac Surgery As­so­ci­ates also has a law­suit tar­get­ing MidAt­lantic that is pend­ing in Bal­ti­more County Cir­cuit Court. MidAt­lantic did not re­spond to re­quests for com­ment. St. Joseph has mailed letters in­form­ing 585 pa­tients who had stents placed by Midei that sub­se­quent clin­i­cal re­view of their cases yielded dif­fer­ent con­clu­sions. Many of them have filed law­suits against Midei and St. Joseph, and Midei has filed one that ac­cuses St. Joseph of ru­in­ing his rep­u­ta­tion.

“St. Joseph Med­i­cal Cen­ter wants pa­tients who be­lieve they have a claim to know that its door is open to pro­duc­tive, rea­son­able and se­ri­ous dis­cus­sions with their attorneys,” the hos­pi­tal said in a writ­ten re­sponse re­gard­ing the suits.

Midei has ag­gres­sively de­fended his clin­i­cal judg­ment in pub­lic state­ments. His at­tor­ney—Stephen Sny­der, a Bal­ti­more lawyer well-known for win­ning big jury awards—did not re­turn calls re­quest­ing com­ment.

The Mary­land Board of Physi­cians has a pend­ing case against Midei al­leg­ing un­pro­fes­sional con­duct, in­clud­ing “gross overuti­liza­tion” of health­care ser­vices. The board re­ceived two anony­mous com­plaints from a St. Joseph em­ployee in 2008, and St. Joseph no­ti­fied the board in July 2009 that Midei’s priv­i­leges had been sus­pended.

Nor­man: St. Joseph co­op­er­ated fully with the feds.

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