Wheeling Hospital accused in kickback lawsuit
It is headed by former Children’s Hospital CEO
The U.S. Department of Justice announced Monday that it has taken over a whistleblower lawsuit filed two years ago against Wheeling Hospital, its CEO and a Pittsburgh management consultant firm, alleging a kickback scheme and illegal payments to doctors to boost revenue.
The suit, in which the U.S. attorney’s office in Pittsburgh intervened under the False Claims Act, names the hospital, R&V Associates and CEO Ronald Violi.
It says Grant Street-based R&V and Mr. Violi, who lives in O’Hara and was formerly CEO at Children’s Hospital in Pittsburgh, violated the Stark Law, which prohibits a hospital from billing Medicare for services referred by doctors who have improper financial relationships with the hospital.
R&V Associates’ website says it is “a business consulting and crisis management firm [that] provides services to a wide variety of businesses, with particular emphasis on health care.” It lists Mr. Violi as a managing director. No one from the company could be reached for comment Monday.
The complaint also says the
defendants violated the AntiKickback statute, which prohibits payments that are made to “induce referrals of services” covered by Medicare or Medicaid.
The complaint initially was filed in U.S. District Court in Pittsburgh under seal in 2017 by Louis Longo, previously executive vice president of the hospital. The case was unsealed in December after DOJ announced it was joining it as a plaintiff.
The lawsuit was brought under the whistleblower provisions of the False Claims Act. Those provisions allow private parties to sue on behalf of the U.S. The act allows the U.S. to intervene, which is what has now happened.
The suit seeks unspecified triple damages against all the defendants under the False Claims Act as well as damages against Wheeling Hospital for the illegally obtained money, plus interest and costs.
The U.S. attorney’s office said Wheeling Hospital’s payments to employed and contracted doctors violated the law because the payments were based on the volume of doctor referrals rather than patient need and exceeded the market value of their services.
“Improper financial arrangements between hospitals and physicians can influence the type and amount of health care that is provided,” said Assistant Attorney General Jody Hunt of DOJ’s civil division.
The complaint said the hospital, under the direction of R&V and Mr. Violi, entered unlawful financial arrangements with physicians strictly to bring in more revenue.
In the early 2000s, the hospital was suffering financially, having lost more than $55 million from 1998 to 2005. In 2006, it entered a management contract with R&V to improve its financial performance.
Within five years, according to the suit, the hospital made a profit of nearly $90 million. The hospital paid R&V and Mr. Violi millions for their services, the suit says, and the contract is still in place.
R&V’s approach was to hire a large number of doctors to capture their patient referrals and dominate the Ohio Valley market. According to the complaint, they accomplished that by paying doctors what amount to kickbacks. The suit says Mr. Violi and R&V were focused heavily on revenue in discussions regarding compensation for doctors.
In one 2008 memo regarding pay for surgeon Ahmad Rahbar, for example, hospital chief financial officer Jim Murdy wrote “we should keep in mind that Rahbar is a man we need to keep happy. In FY07 he generated over $11 million in revenues for us,” according to the complaint.
The suit cites numerous other examples, saying, “As a result, since at least 2007, defendants knowingly submitted and caused to be submitted thousands of false claims to the United States, which resulted in millions of dollars of reimbursement to Wheeling Hospital by the Medicare program for claims that were ineligible for payment because of Defendants’ unlawful conduct.”
The law requires that compensation paid to doctors by hospitals exclude the “volume and value” of patient referrals by those doctors. The idea is to make sure doctors provide treatment based on patient need rather than profit.
But the complaint says the hospital’s goal was to gain “monopolistic power” in the Ohio Valley, with some doctors paid more than $1 million a year.
“Medicare and Medicaid beneficiaries trust that their health care providers will make decisions based on sound medical judgment,” said U.S. Attorney Scott W. Brady. “Our office will take decisive action against any medical providers who betray that trust and make medical decisions based on their own financial interests.”