HCA disclosed in a filing with the Securities and Exchange Commission that day that company officials have reviewed cardiology cases at about 10 hospitals, mostly in Florida, but the search for such reviews remains ongoing. HCA didn't give a timeline for when the information will be turned over.
The day of the disclosure, HCA's stock price dropped 4% but has since rebounded (See chart). Simultaneously, HCA defended its clinical practices in a four-page statement pre-empting a New York Times story posted online later that evening reporting that the chain had internally uncovered evidence of unneeded procedures between 2002 and 2010.
Key legal observers said in interviews that the federal probe of HCA may have its roots in a federal whistle-blower lawsuit under the False Claims Act that remains under seal. Also known as “qui tam” lawsuits, such cases often remain secret for years, even from the targets of the litigation, as government lawyers investigate allegations leveled by private individuals.
“These types of cases are often brought by whistle-blowers because you really do require some sort of insider information about how medical procedures are taking place to get it started,” said Stephen Meagher, the California whistle-blower attorney whose lawsuits against HCA sparked an investigation that led to the company—then known as Columbia/HCA Healthcare Corp.—to pay a $1.74 billion between 2000 and 2003 to resolve Medicare fraud allegations.
Meagher said he does not represent a whistle-blower today in any case against HCA. However, two former high-ranking federal prosecutors in Florida confirmed in interviews with Modern Healthcare that the federal inquiry of HCA appears to be based on insider materials provided by a whistle-blower. And HCA's statement to investors noted that it could not predict the effect of “any potential claims under the federal False Claims Act.”
HCA officials and the federal prosecutor's office in Miami declined to comment.
Meanwhile, one plaintiff's law firm—Leopold Law in Palm Beach Gardens, Fla.—confirmed to Modern Healthcare that it has received inquiries from HCA patients about a possible malpractice lawsuit involving cardiac procedures. But history shows that lawsuits and investigations based on questions of medical necessity are tough to win in court because so much depends on subjective physician judgment.
“Yes, medical-necessity cases can be hard to prove,” said A. Brian Albritton, former U.S. attorney in Orlando, Fla., and now an attorney with Phelps Dunbar. “They're often based on statistical abnormalities rather than direct evidence that a specific procedure was unjustified.”
In 2003, Dallas-based hospital chain Tenet Healthcare Corp. paid $395 million to settle claims with more than 750 former patients who filed lawsuits against the company; Tenet also paid more than
$54 million to resolve state and federal allegations that physicians at one of its hospitals provided medically unnecessary cardiac procedures.
Whistle-blowers who initially brought that case against Tenet's Redding (Calif.) Medical Center received an $8.1 million share of the government settlement. Tenet sold the hospital after the allegations came to light.
Experts say that while cardiology procedures are high-margin service lines that subsidize unprofitable ones, the business strategy comes with high risk as it also attracts a healthy dose of legal scrutiny.
In 2010, for example, St. Joseph Medical Center in Towson, Md., paid $22 million and entered a corporate integrity agreement to resolve federal whistle-blower litigation without admitting to allegations that it profited from medically unnecessary cardiac procedures by Dr. Mark Midei. The doctor denied the allegations that cost him his medical license, but the hospital is still in litigation with some of the 585 former patients notified about the situation.
A different Maryland cardiologist, Dr. John McLean, was convicted and sentenced to eight years in prison last year for performing unnecessary procedures on more than 100 patients at another hospital, Peninsula Regional Medical Center, Salisbury, Md., whose administrators agreed to pay the federal government $1.8 million and enter a corporate integrity agreement with HHS for failing to stop McLean's unneeded procedures.
In the Pittsburgh area, UPMC Hamot hospital in Erie, Pa., is fighting a False Claims Act lawsuit from one of its former cardiologists, Dr. Tullio Emanuele, alleging that the hospital paid kickbacks to a medical practice that is accused of conducting medically unnecessary cardiac procedures in which two patients died. The hospital and physicians have denied the allegations in court filings and requested the lawsuit be dismissed.
Dr. John Harold, a cardiologist associated with the Cedars-Sinai Heart Institute in Los Angeles and president-elect of the American College of Cardiology, said that in the face of such scrutiny, physicians and hospitals need to ensure they can document and explain their decisionmaking with cardiac cases.
HCA's disclosure of the federal probe on Aug. 6 coincided with the publication of a critical story in the New York Times that quoted a former nurse saying he witnessed medically unnecessary procedures at an HCA hospital. Although the newspaper reported that the nurse's allegations were proven true by an internal review, the hospital did not renew the nurse's contract shortly after, according to a trove of internal company records the Times obtained.
“One of the most unfortunate things about this story is that the worker lost his job for raising concerns. From a societal perspective, that is of great concern,” said Dr. Raymond Gibbons, a cardiologist with the Mayo Clinic, Rochester, Minn., and past president of the American Heart Association. “That is just awful. If we lose that as a mechanism because people are afraid of losing their jobs, the long-term consequences of that are very bad.”