King's Daughters Medical Center settles false-claims charges, and other news

King's Daughters Medical Center has finalized a settlement with the U.S. Justice Department that resolves allegations that it performed unnecessary cardiac procedures and had inappropriate financial relationships with referring physicians.

The Ashland, Ky.-based hospital, the largest in the state, had disclosed in its 2013 annual report that it was in negotiations for the $40.9 million settlement.

“The settlement is not an admission of wrongdoing on behalf of the medical center,” the hospital said in a written statement.

The Justice Department alleged that between 2006 and 2010, King's Daughters billed Medicare and Medicaid for numerous unnecessary coronary stents and diagnostic catheterizations. Moreover, it claimed that physicians falsified medical records to justify the unnecessary procedures. The settlement also covers allegations that King's Daughters violated the Stark law by paying certain cardiologists unreasonably high salaries.

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Halifax Health, embroiled in a high-profile whistle-blower lawsuit alleging $70 million in Medicare fraud, was hit with sanctions by a federal judge for destroying patient files sought in the case. Punishment for what the judge called “reprehensible” behavior is likely to cost the hospital hundreds of thousands of dollars.

The Daytona Beach, Fla., health system agreed to pay the U.S. Justice Department $85 million last March to settle the first half of the case, which alleged the system illegally paid doctors to refer Medicare patients for treatment. Settlement talks for the second phase of the case are ongoing between the hospital and Elin Baklid-Kunz, the whistle-blower who still works at Halifax as physician services director.

Full records are critical to determining whether the hospital was illegally admitting Medicare patients for expensive short-stay hospital care instead of treating them in cheaper outpatient settings. Halifax was ordered several times to turn over the records, which it should have retained under a December 2009 court order, according to a summary by U.S. Magistrate Judge Thomas Smith.

Instead, hospital lawyers delayed action and then turned over incomplete and sometimes-illegible records, the judge concluded. In December 2013, Halifax lawyers admitted that the system in 2012 had destroyed all records covering short inpatient stays between 2002 and 2004, the years when many of the allegedly illegal inpatient admissions took place.

“Halifax's conduct is reprehensible,” Smith wrote last month. He recommended that the Orlando judge overseeing the case order Halifax to pay attorney fees expended in trying to get the records.

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Athens (Ga.) Regional Medical Center President and CEO James Thaw resigned amid complaints from the medical staff that his administration bungled the implementation of an electronic health-record system, according to local news reports.

The rollout of a Cerner Corp. EHR system went live May 4 in “most areas” of the organization, according to a news release issued at the time. Plans called for the system to extend to Athens Regional's employed physician offices and its four urgent-care centers.

On May 15, though, prominent local physicians sent a letter to Thaw and Senior Vice President and Chief Information Officer Gretchen Tegethoff complaining that the system was causing “medication errors” and “orders being lost or overlooked,” according to a report in the Athens Banner-Herald, which obtained a copy of the letter. The timeline was “too aggressive” and users were unready, the physicians said.

Thaw claimed that the hospital system took “swift action” to solve the problems, specifically by adding specialized workers to help physicians, according to the Banner-Herald. The medical staff, however, delivered a vote of “no confidence” on May 22, according to a report in the Athens Flagpole. —Darius Tahir