Any hope of light sentences for the three defendants in the Kansas City Medicare kickback case was dashed last week when U.S. District Judge John Lungstrum handed down substantial prison time and fines.
The three were convicted in April of conspiring to solicit and pay bribes for referrals of nursing home patients to Baptist Medical Center in Kansas City, Mo., and other hospitals.
On Oct. 28 the judge sentenced them to a cumulative 13 years in prison and $175,000 in fines. One defendant, Robert LaHue, D.O., portrayed as a ringleader in the scheme, will have to pay an additional $142,040 in restitution. That was deemed the amount of money that was claimed on Medicare cost reports and that the government has not yet recovered in civil settlements from the hospitals.
His brother, Ronald LaHue, D.O., received the lightest sentence of the three for being a party to the scheme but not a leader.
Dan Anderson, however, the once highly respected chief executive officer of Baptist hospital, received the heaviest sentence within the possible sentencing range and is the first CEO to be convicted of criminal charges in a kickback case. Lungstrum sentenced both LaHue brothers to the minimum prison time in their sentencing ranges, but he sentenced Anderson to 51 months, the midpoint in his range of 46 to 57 months. The judge told Anderson that he bore heavy responsibility for involving other individuals and institutions in the payments-for-patients scheme.
Thomas Dolan, president of the American College of Healthcare Executives, called the case "a terrible personal tragedy" for Anderson. "I don't know him. My feeling is that this is such a complex area (of law), I sincerely hope the government did a thorough investigation and is positive about the charges."
"It was a stiff sentence on Anderson," said Bruce Houdek, Robert LaHue's lawyer.
Jackie Williams, U.S. attorney for Kansas, said the "complex and lengthy investigation . . . has produced needed changes in the healthcare industry." He commended lead prosecutor Tanya Treadway and another prosecutor, William Bowne, for their work.
All three defendants are free on bond pending appeal to the 10th U.S. Circuit Court of Appeals in Denver.
If their appeals fail, Anderson and Robert LaHue will do their time in the federal prison camp for low-risk offenders adjacent to the U.S. Penitentiary in Leavenworth, Kan. It is within an hour's drive of Kansas City. Ronald LaHue will be sent to a camp in Yankton, S.D., as he requested. Each defendant must serve 85% of his sentence before release for good behavior is possible. For Anderson, that would amount to three years and seven months.
The appeals process will take at least a year-and-a-half, said James Wyrsch, Anderson's lawyer. The judge agreed that substantive issues need clarification at the appellate level. One such issue is the so-called Greber rule, which Lungstrum instructed the jury to use. Under the rule, if any portion of a payment was made to induce referrals, the action is considered a violation of anti-kickback law. The defense argues that a narrower rule should have applied, so that the payments would have had to be the major reason for the referral. It's not clear which interpretation is preferred at the circuit court level.
Asked to interpret the judge's message, Houdek pointed out that Lungstrum expanded the sentences for Robert LaHue and Anderson because he said they led and organized the conspiracy. "Those people who are in charge are going to pay the highest price," Houdek said. "Even if you ask for or negotiate for an amount of money, if it's not justified, it can be construed as solicitation for a bribe. If you're going to have a relationship between doctors and hospitals, (it's) going to have to be very carefully documented and justified."
One of the glaring weaknesses of the defense's case was the lack of a fair-value analysis of the services that the LaHue brothers' Blue Valley Medical Group was providing the nursing home patients and the hospitals. The prosecution alleged that the value was inflated to disguise bribes.