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Kentucky Hospital Settles in Qui Tam Lawsuit

Saint Joseph Health System, Inc. doing business as Saint Joseph London Hospital (“St. Joseph”) has agreed to settle allegations by three whistleblowers that it violated the federal False Claims Act and the Stark Law. St. Joseph has agreed to pay $16.5 million to resolve the pending qui tam action against it. The qui tam action also names other defendants whose claims have not been resolved. According to the United States Attorney for the Eastern District of Kentucky, it is the second largest health care fraud settlement in the district.

The whistleblowers alleged that multiple physicians working at St. Joseph performed invasive cardiac procedures on government healthcare recipients, when the procedures were not medically necessary. According to the government, the physicians in question were part of the Cumberland Clinic, a physician group with an exclusive agreement to provide cardiology services to patients of St. Joseph.

Specifically, the government alleged that between January 1, 2008 and August 31, 2011, several medical professionals affiliated with St. Joseph unnecessarily implanted coronary stents and pacemakers; and performed coronary artery bypass graft surgeries and diagnostic catheterizations on Medicare and Medicaid patients. The whistleblowers claimed that bills submitted to Medicare and Medicaid for the cardiac procedures violated the False Claims Act because the hospital knowingly misrepresented that the procedures were medically necessary, when they were not. Government health care programs such as Medicare and Medicaid will only reimburse health care providers for procedures that are deemed to be medically necessary. The government claimed that hospital received between $10,000 and $15,000 for medical procedures such as cardiac stents.

In addition, the whistleblowers claimed that St. Joseph violated the Stark Law by entering into sham management agreements with doctors at the Cumberland Clinic. The Stark Law prohibits physicians from referring Medicare and Medicaid patients to an entity with whom the physicians have a financial relationship. According to the whistleblowers, the agreements between St. Joseph and the Cumberland Clinic physicians served as a financial inducement to refer patients to St. Joseph. The government contended that government health care programs are not responsible to pay claims resulting from the improper financial relationship.

The whistleblowers, Michael Jones, Paula Hollingsworth, and Michael Rukavina, will share in $2.46 million of the settlement proceeds as their reward under the qui tam provisions of the False Claims Act.

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