There's a certain Robin Hood quality to a recent partnership to provide indigent healthcare between a Michigan hospital that pleaded guilty to criminal fraud charges and the U.S. attorney in Grand Rapids, Mich.
In January, United Memorial Health Center (UMHC), the flagship of two-hospital United Memorial Health System in Greenville, Mich., became one of the few acute-care hospitals to plead guilty to criminal fraud charges.
The 65-bed community hospital agreed to pay a $1 million fine and reimburse government and private insurers $750,000 for submitting fraudulent bills to Medicare and other payers for treatments performed from 1994 to 1996 by former UMHC pain specialist Jeffrey Askanazi. As part of the settlement, the government has agreed to match up to $500,000 that the hospital raises for indigent care.
The settlement agreement ends a six-year federal investigation, following charges that UMHC executives knew or should have known Askanazi's treatments were unnecessary and failed to act to stop him. Askanazi, who left the hospital in 1996 after one of his patients died, was later convicted of fraud in 1998 and sentenced to serve three years in prison.
"It's groundbreaking," said Mac Thornton, former chief counsel to HHS' inspector general. Now in private practice with the Washington office of Sonnenschein Nath & Rosenthal, Thornton has reviewed hundreds of settlement agreements.
"I think it's a cool idea, and I can't remember seeing anything like it before," Thornton said. "Rather than having the money disappear into the U.S. Treasury, this would directly benefit needy people in that county. I think this agreement establishes an interesting precedent."
In September, Spectrum Health, a seven-hospital not-for-profit system based in Grand Rapids, announced that it would purchase UMHC and its sister facility, 92-bed Kelsey Memorial Health Center in Lakeview, Mich., for an undisclosed price.
The merger discussions began about the same time as the criminal plea negotiations, officials with the U.S. attorney and Spectrum said. During those talks both sides agreed to form a matching funds endowment that would finance indigent care in Montcalm County, where the system is located.
"The government was very supportive of the concept," Spectrum spokesman Bruce Rossman said. "We are still defining the nature of the program. But the idea is to provide access to healthcare to underserved and uninsured residents through a matching fund. The government will match dollar for dollar up to $500,000-half the amount of the settlement-for the program. We have two years to raise that money to match the $500,000 and we feel very confident we can do that."
Rossman said the matching fund is "an excellent way to close one chapter and move forward to another in a very positive manner that will benefit residents of Montcalm County."
Glenn Martin, the assistant U.S. attorney who heads the office's healthcare fraud division in Lansing, Mich., said the government did not assess the fine to reduce care in Montcalm County or drive the hospital into bankruptcy. He added that during the negotiations Spectrum said it would need to invest millions of dollars in UMHC to bring it up to its standards.
"United Memorial had been in financial difficulty before this, and when you combine that with the fine and cost of litigation it was in a tough situation," Spectrum spokesman Rossman said. "That's why we appreciate the willingness of the federal government to work with us."
"The idea was never to shut down healthcare there but to get them to acknowledge and correct the problems and bring them into compliance," Martin said.
The matching fund agreement was signed by U.S. Attorney Margaret Chiara and Spectrum on Sept. 5 and since has been approved by a U.S. District Court judge in Grand Rapids.
"This landmark agreement reflects the United States' commitment to protect patients not only by vigorously prosecuting healthcare fraud that drains valuable healthcare resources," Chiara said, "but also by making affordable healthcare available to the patients with limited income."