Healthcare Business News

Docs, Ala. system accused in $522M kickback case

By Joe Carlson
Posted: July 9, 2013 - 6:00 pm ET

Cardiologists and the Infirmary Health System in Mobile, Ala., are accused of needlessly exposing patients to radiation in a nine-year-running kickback scheme tainting an estimated $522 million in Medicare, Medicaid and Tricare reimbursements since 2004.

The U.S. Justice Department announced it will join a whistle-blower's lawsuit against Infirmary and the independent Diagnostic Physicians Group, making it at least the third ongoing government False Claims case against a hospital seeking more than $100 million.

The Infirmary case was filed under seal in 2011 by local cardiologist Dr. Christian Heesch and came to light Monday when the Justice Department declared its intention to intervene. The department has four months to file its own complaint based on Heesch's allegations. The government often pursues a narrower set of allegations than the ones laid out in the whistle-blower lawsuit that draws the investigation.

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Mark Nix, CEO of Infirmary Health System, said in an emailed statement that the allegations relate mainly to work done in Infirmary's Diagnostic and Medical Clinic, which is a subsidiary of Infirmary and is a codefendant. He said the clinic denies the allegations and fight them vigorously.

Heesch, who continues to practice in the area, alleged that he was told that the way the hospital paid its physicians is “legally defensible” even though it “could be illegal” under the Stark law. He filed the lawsuit, according to his complaint, after he was warned to stop asking questions and writing “disruptive” memos about how the doctors were paid.

The allegations center on nuclear stress tests, a common type of imaging in cardiology in which patients ingest radioactive dye and are exposed to low levels of radiation to test blood flow through the heart. The complaint alleges the tests were blatantly overused because doctors were financially rewarded for ordering more tests, even though they expose patients to small doses of radiation.

The Justice Department intervenes in only about 20% of all whistle-blower claims. Justice officials have said publicly many times that one of the top factors they consider in deciding whether to join a case is whether it goes beyond financial matters and affects patient health.

Heesch said patient medical records were altered to justify the tests, including instances where physicians would falsely claim that patients had complained of chest pains or had abnormal test results.

In return for steering patients toward nuclear stress tests, the health system provided below-market office space and an off-the-books pay arrangement in which the hospital gave the physicians a share of the fees from government health programs. The secret payouts were held back a year and disguised using a “fudge factor” so that they didn't directly correlate with physicians' prescribing activity, the lawsuit alleged.

The arrangement allegedly violated the Social Security Act's prohibition on kickbacks in healthcare, as well as the Stark law prohibition on physicians referring patients to other providers in which they have a financial interest. The violations would create illegal claims for government healthcare dollars, triggering damages up to three times the original payments under the False Claims Act.

Nix said the government's decision to join Heesch's complaint was disappointing, especially since the health system and the clinic has worked with government investigators for more than a year to respond to questions.

“We believe the clinic has provided services and compensated its physicians in full accordance with the law and that the clinic acted in the best clinical interest of our patients,” Nix said in a statement (PDF). “Tests performed at the clinic were medically necessary to provide appropriate care for our patients and in compliance with applicable requirements.”

The Justice Department has at least two other high-dollar cases pending against healthcare providers. The government asked a U.S. district judge in South Carolina to fine 242-bed Tuomey Healthcare System as much as $237 million after a jury ruled on May 8 that the hospital violated the Stark law and False Claims Act because compensation for 19 local specialists varied with the volume of services they referred to the hospital.

And in a case slated for trial in November, the Justice Department has asked for a minimum of $354 million against 582-bed Halifax Health of Daytona Beach, Fla., in a whistle-blower case that alleged the hospital compensated six oncologists based on the operating margin of the system's cancer program.

Follow Joe Carlson on Twitter: @MHJCarlson

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