Attorney General Jack Conway today announced that Saint Joseph London Hospital has agreed to pay $16.5 million to resolve civil allegations that it submitted false or fraudulent claims to the Medicare and Kentucky Medicaid programs for a variety of medically unnecessary heart procedures.

General Conway, along with Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, the Federal Bureau of Investigation (FBI), the U.S. Dept. of Health and Human Services (HHS), and the U.S. Dept. of Justice, jointly made the announcement. The investigation was handled by General Conway’s Medicaid Fraud and Abuse Control Unit, the FBI, HHS-OIG, the Civil Frauds Section of the U.S. Dept. of Justice in Washington, D.C., and the U.S. Attorney’s Office.

"I applaud the hard work of my Medicaid Fraud Unit and all of the agencies involved in this case," General Conway said. "I am pleased that we have reached this settlement and are recovering thousands of dollars for a vital state program and for taxpayers."

"We all rely on health care providers to make treatment decisions based on clinical, not financial, considerations," U.S. Attorney Kerry B. Harvey said. "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."

According to the settlement agreement, from Jan. 1, 2008 until Aug. 31, 2011, several doctors working at the hospital performed numerous invasive cardiac procedures on Medicare and Medicaid patients who did not need them. The hospital then billed the federal programs for these unnecessary procedures, which include coronary stents, pacemakers, coronary artery bypass graft surgeries (“CABGS”), and diagnostic catheterizations. The claims seeking reimbursement allegedly violated the False Claims Act because under federal law, Medicare and Medicaid programs only reimburse health care providers for operations that are deemed medically necessary. Hospitals generally receive between $10,000 and $15,000 for medical procedures such as heart stents.

These doctors were affiliated with Cumberland Clinic, a physician group that entered an exclusive arrangement with Saint Joseph in 2008 to provide cardiology services to the hospital’s patients.

The settlement also resolves allegations that Saint Joseph violated the federal Stark Law and Anti-Kickback Statute by entering into sham management agreements with doctors at the Cumberland Clinic. These agreements served as an inducement for the doctors to refer patients to Saint Joseph. Therefore, the government contends that Medicare and Medicaid are not responsible to pay claims that resulted from this improper financial relationship between the doctors and the hospital.

In connection with this settlement, Saint Joseph has agreed to enter into a Corporate Integrity Agreement with the HHS-OIG, which obligates the hospital to undertake substantial internal compliance reforms and commit to a third-party review of its claims to federal health care programs for the next five years.

Today’s agreement represents the second largest health care fraud settlement in the Eastern District of Kentucky (district includes 67 counties).

The settlement stems from a whistleblower complaint that was filed by three Lexington cardiologists pursuant to the qui tam provisions of the False Claims Act. That law allows the whistleblowers to share in settlement proceeds that result from their bringing claims of fraud to the government’s attention. In this case, the three doctors will receive $2,458,810 of the $16.5 million settlement. Prior to the doctors filing their complaint, Saint Joseph voluntarily disclosed to the government that one of its cardiologists, Dr. Sandesh Patil, had performed medically unnecessary coronary stents. Dr. Patil previously pleaded guilty to a federal health care fraud offense and was sentenced to 30 months in prison.

The Commonwealth of Kentucky will receive approximately $365,851, which represents the state’s share of the government’s recovery of Medicaid funds. The Medicaid program is funded jointly by the federal and state governments.

While the settlement resolves claims against Saint Joseph London, the U.S.Government will intervene in the case initiated by the whistleblowers and continue litigating allegations of False Claims Act violations arising out of unnecessary cardiac procedures against most of the other defendants named in the qui tam. It will also continue a related criminal investigation.



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