CoxHealth President and Chief Executive Officer Robert Bezanson made the most of his first chance to speak publicly about a three-year federal investigation hanging over his two-hospital system in Springfield, Mo.
As the Justice Department announced last week that CoxHealth would pay $60 million to settle a variety of False Claims Act allegations, Bezanson appeared at a news conference, and the system posted a Web page including
10 pages of background and explanation as well as a three-minute video segment of the CEO.
The message: The regulations at issue are subject to interpretation and have ensnared some of the countrys most respected hospitals, and the potential cost and time spent litigating the matter would further delay capital projects that have been shelved. The system would lose even if it won in court.
The alleged violations of the anti-kickback statute and the Stark restrictions on physician self-referral mostly stem from arrangements identified as a potential problem in an internal review and reported to the government by CoxHealth not long after Bezanson took the helm in August 2004. According to the settlement agreement, in which CoxHealth denies the conduct, the alleged transgressions include salaries for an independent physicians group at a system-owned clinic that were calculated in part based on revenue generated from pharmaceuticals, durable medical equipment and diagnostic services, as well as medical directorships that reflected the volume of referrals.
Media reports of the investigation started in August 2005 when the Justice Department sought to delay discovery in a lawsuit filed by two employees who said they were fired because they blew the whistle on some of the issues under the governments lens. More stories came in April after the system disclosed a tentative agreement to bondholders. While the investigation was ongoing, CoxHealth declined to comment on the matter. Thats probably part of the greatest frustration, Bezanson said in an interview. Were a very transparent organization.
The amount CoxHealth agreed to pay is one of the larger sums to come from hospitals and systems in False Claims Act cases since the law was beefed up in 1986, though nowhere near the largest: $900 million by Tenet Healthcare Corp. in 2006. Bezanson emphasized the figures are based on the targeted organizations ability to pay, and CoxHealths tab is neither representative of a probable verdict, which could have been significantly higher, nor a statement on the strength of the governments case. That characterization was echoed by Assistant U.S. Attorney Joel May in Kansas City, Mo., the office that led the investigation.
In response to a question about the apparently straightforward problems posed by the medical directorships as described in the agreement, May said, If you look at the regulations, thats kind of the example of what not to do.