Whistle-blower replay

Once again, a critic who says he was reprimanded for confidentially raising concerns about doctors' pay has turned into a whistle-blower for the federal government.

This time it happened in Mobile, Ala., where cardiologist Dr. Christian Heesch says a profit-sharing arrangement between doctors and the diagnostic clinic owned by Infirmary Health System violated the Stark law and False Claims Act. Potential damages are said to be north of $500 million, making it at least the third active nine-figure Stark case pending against a hospital in which the U.S. Justice Department has intervened as a plaintiff.

Unlike some of the other cases, Heesch also pinpoints human victims: patients, including a few military families on Tricare, whom he claims were needlessly exposed to potentially harmful radiation through nuclear stress tests that use radioactive dye to measure the flow of blood through the heart. Most of the victims cited in the complaint were on Medicare and Medicaid.

Mark Nix, CEO of Infirmary Health System, said in an e-mailed statement that the allegations relate mainly to work done in Infirmary's Diagnostic and Medical Clinic, a subsidiary of Infirmary and codefendant. He said the clinic denies the allegations and will fight them vigorously.

Heesch said he began speaking out about his concerns at least four years before he filed suit, objecting to both the arrangements that gave physicians incentive to allegedly falsify medical records to justify more testing, as well as the high number of stress tests being done on patients.

In March 2009, Heesch made a confidential report to the Alabama Department of Public Health, which he said cited the system's Mobile Infirmary Medical Center with violations for improper imaging and ordering corrective actions.

Heesch said the corrections and objections didn't stop the high rates of testing. Instead, the new test-approval procedure was “watered down” before it was implemented, and he was warned to stop mentioning his concerns about the underlying practices that led to the unneeded procedures.

Rather than having his concerns addressed, Heesch “repeatedly was advised to curtail his 'disruptive' writing of memoranda,” the lawsuit says.

Experts say potential whistle-blowers often raise their concerns privately within organizations, and turn to the court system when their efforts at reform are rebuked.

The Justice Department has four months to file a separate complaint based on Heesch's allegations. The government often pursues a narrower set of allegations than the ones laid out in the whistle-blower lawsuit that draws the investigation.

Heesch's complaint alleges the tests were blatantly overused because doctors were financially rewarded for ordering more tests, even though they expose patients to small doses of radiation.

The Justice Department intervenes in only about 20% of all whistle-blower claims. Justice officials have said publicly many times that one of the top factors they consider in deciding whether to join a case is whether it goes beyond financial matters and affects patient health.

Heesch said patient medical records were altered to justify the tests, including instances where physicians would falsely claim that patients had complained of chest pains or had abnormal test results.

In return for steering patients toward nuclear stress tests, the lawsuit alleged, the health system provided below-market office space and an off-the-books pay arrangement in which the hospital gave the physicians a share of the fees from government health programs. The secret payouts were held back a year and disguised using a “fudge factor” so they didn't directly correlate with physicians' prescribing activity, it said.

The arrangement allegedly violated the Social Security Act's prohibition on kickbacks in healthcare, as well as the Stark law prohibition on physicians referring patients to other providers in which they have a financial interest. The violations would create illegal claims for government healthcare dollars, triggering damages up to three times the original payments under the False Claims Act.

Nix said the government's decision to join Heesch's complaint was disappointing, especially since th e system and the clinic have worked with government investigators for more than a year to respond to questions.

“We believe the clinic has provided services and compensated its physicians in full accordance with the law and that the clinic acted in the best clinical interest of our patients,” Nix said in a statement. “Tests performed at the clinic were medically necessary to provide appropriate care for our patients and in compliance with applicable requirements.”

The Justice Department has at least two other high-dollar cases pending against healthcare providers. The government asked a federal district judge in South Carolina to fine Tuomey Healthcare System as much as $237 million after a jury ruled May 8 that the hospital violated the Stark law and False Claims Act because compensation for 19 local specialists varied with the volume of services they referred to the hospital.

And in a whistle-blower case slated for trial in November, the Justice Department has asked for $354 million against Halifax Health of Daytona Beach, Fla., in a case that alleged the hospital compensated six oncologists based on the operating margin of the system's cancer program.

Follow Joe Carlson on Twitter: @MHJCarlson