St. Joseph Medical Center in Towson, Md., officially moved beyond a federal probe of its dealings with a group of cardiovascular surgeons. But the $22 million settlement doesn't settle the underlying mess, which has sown a thicket of litigation.
Kickback claims settled
Maryland case shows feds eyeing physician contracts
The U.S. Justice Department's piece of it, meanwhile, signals the government's growing interest in scrutinizing physician contracts.
The 332-bed hospital, part of Denver-based Catholic Health Initiatives, agreed to pay $22 million last week to settle allegations that its contracts with a cardiology group created kickbacks and prohibited referrals. St. Joseph officials announced an “agreement in principle” with the government in July 2009, two months after confirming that three top executives had been placed on administrative leave to avoid conflicts of interest with an investigation.
The government alleges that St. Joseph entered contracts with MidAtlantic Cardiovascular Associates, Pikesville, Md., that were “conduits” for kickbacks for bringing lucrative cardiac procedures to the hospital from 1996 to 2006, according to the agreement entered in U.S. District Court in Baltimore.
The settlement, in which St. Joseph admits no liability, also resolves allegations that the hospital billed Medicare and Medicaid for medically unnecessary procedures performed by Mark Midei, who had been a partner at MidAtlantic and was employed by St. Joseph from Jan. 1, 2008, to May 12, 2009.
St. Joseph President and CEO Jeffrey Norman said in a written statement that the hospital cooperated with the government. “Medical center leadership operated from the belief that a cooperative and transparent approach guided by its faith-based system best served the interests of its patients and community and reflects our mission and values.”
The agreement lists a few contracts for administrative services and medical directorships identified as a problem. One described as typical was a contract for EKG reading, in which MidAtlantic was paid “well in excess” of what the hospital was reimbursed by payers. MidAtlantic allegedly solicited the terms to cover the salaries of two nurse practitioners with no role in reading EKGs.
The government's interest was triggered by a whistle-blower lawsuit filed by physicians in a competing group, Cardiac Surgery Associates. The settlement resolves their allegations pertaining to St. Joseph. Neither MidAtlantic nor Midei are parties to the settlement, and the Justice Department requested that the complaint and the identities of 53 additional defendants remain under seal to protect an ongoing investigation, according to court records.
Healthcare lawyer David Robbins, a shareholder in Bennett Bigelow & Leedom in Seattle, said the government clearly has a growing interest in parsing physician contracts in fraud cases, noting that the Justice Department in June won a case against Tuomey Healthcare System in Sumter, S.C. “It seems that this is a new trend of litigation where they really are trying to take apart or scrutinize whether compensation paid is indeed fair market value.”
Cardiac Surgery Associates also has a lawsuit targeting MidAtlantic that is pending in Baltimore County Circuit Court. MidAtlantic did not respond to requests for comment.
St. Joseph has mailed letters informing 585 patients who had stents placed by Midei that subsequent clinical review of their cases yielded different conclusions. Many of them have filed lawsuits against Midei and St. Joseph, and Midei has filed one that accuses St. Joseph of ruining his reputation.
“St. Joseph Medical Center wants patients who believe they have a claim to know that its door is open to productive, reasonable and serious discussions with their attorneys,” the hospital said in a written response regarding the suits.
Midei has aggressively defended his clinical judgment in public statements. His attorney—Stephen Snyder, a Baltimore lawyer well-known for winning big jury awards—did not return calls requesting comment.
The Maryland Board of Physicians has a pending case against Midei alleging unprofessional conduct, including “gross overutilization” of healthcare services. The board received two anonymous complaints from a St. Joseph employee in 2008, and St. Joseph notified the board in July 2009 that Midei's privileges had been suspended.
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