Saint Joseph London Hospital to Pay $16.5 Million to Settle False Claims Act Allegations of Unnecessary Heart Procedures
Represents the Second Largest Federal Health Care Fraud Settlement in the Eastern District of Kentucky

LONDON—Saint Joseph Health System Inc., d/b/a Saint Joseph London Hospital (Saint Joseph) has agreed to pay the U.S. government $16.5 million to resolve civil allegations that it submitted false or fraudulent claims to the Medicare and Kentucky Medicaid programs for a variety of medically unnecessary heart procedures.

“We all rely on health care providers to make treatment decisions based on clinical, not financial, considerations,” said U.S. Attorney Kerry B. Harvey. “The conduct alleged in this case violates that fundamental trust and squanders scarce public resources set aside for legitimate health care needs. We will use every available tool to protect our federal health care programs and the patients who they serve.”

According to the settlement agreement, the U.S. government contends that from January 1, 2008 until August 31, 2011, several doctors working at the hospital performed numerous invasive cardiac procedures on Medicare and Medicaid patients who did not need them. The hospital then billed the federal programs for these unnecessary procedures, which include coronary stents, pacemakers, coronary artery bypass graft surgeries (CABGS), and diagnostic catheterizations. The claims seeking reimbursement allegedly violated the False Claims Act because under federal law, Medicare and Medicaid programs only reimburse health care providers for operations that are deemed medically necessary. Hospitals generally receive between $10,000 and $15,000 for medical procedures such as heart stents.

These doctors were affiliated with Cumberland Clinic, a physician group that entered an exclusive arrangement with Saint Joseph in 2008 to provide cardiology services to the hospital’s patients.

The settlement also resolves allegations that Saint Joseph violated the federal Stark Law and Anti-Kickback Statute by entering into sham management agreements with doctors at the Cumberland Clinic. These agreements served as an inducement for the doctors to refer patients to Saint Joseph. Therefore, the government contends that Medicare and Medicaid are not responsible to pay claims that resulted from this improper financial relationship between the doctors and the hospital.

In connection with this settlement, Saint Joseph has agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services, Office of Inspector General (HHS-OIG), which obligates the hospital to undertake substantial internal compliance reforms and commit to a third-party review of its claims to federal health care programs for the next five years.

“Cases such as this threaten both the health of patients and the financial integrity of the Medicare and Medicaid programs,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. “This settlement is another example of the OIG’s commitment to protecting our beneficiaries and to recovering any money that has been improperly paid as a result of medically unnecessary procedures.”

Today’s agreement represents the second largest health care fraud settlement in the Eastern District of Kentucky (district includes 67 counties).

The settlement stems in large part from a whistleblower complaint that was filed by three Lexington cardiologists pursuant to the qui tam provisions of the False Claims Act. That law allows the whistleblowers, also known as relators, to share in settlement proceeds that result from their bringing claims of fraud to the government’s attention. In this case, Doctors Michael Jones, Paula Hollingsworth, and Michael Rukavina will receive $2,458,810 of the $16.5 million settlement. Prior to the relators filing their complaint, Saint Joseph voluntarily disclosed to the government that one of its cardiologists, Dr. Sandesh Patil, had performed medically unnecessary coronary stents. Dr. Patil previously pleaded guilty to a federal health care fraud offense and was sentenced to 30 months’ imprisonment.

“Hospitals that place their financial interests above the well-being of their patients will be held accountable,” said Stuart Delery, Assistant Attorney General for the Civil Division of the United States Department of Justice. “The Department of Justice will not tolerate those who abuse the public health care programs to which we all contribute and on which we all depend.”

“The criminal investigation and civil settlements are excellent examples of the importance of whistleblower complaints,” said Perry K. Turner, Special Agent in Charge of the FBI in Kentucky. “This result would not be possible without the commitment of private citizens exposing this type of egregious fraud.”

The Commonwealth of Kentucky is also a party to the agreement and will receive approximately $365,851, which represents the state’s share of the government’s recovery of Medicaid funds. The Medicaid program is funded jointly by the federal and state governments.

“I applaud the hard work of my Medicaid Fraud Unit and all of the agencies involved in this case,” said Kentucky Attorney General Jack Conway. “I am pleased that we have reached this settlement and are recovering thousands of dollars for a vital state program and for taxpayers.”

While the settlement resolves claims against Saint Joseph London, the U.S. government will intervene in the case initiated by the whistleblowers and continue litigating allegations of False Claims Act violations arising out of unnecessary cardiac procedures against most of the other defendants named in the qui tam. It will also continue a related criminal investigation.

The investigation was conducted by the FBI, HHS-OIG, Kentucky Office of Attorney General, Medicaid Fraud and Abuse Control Unit (MFCU), the Civil Frauds Section of the Department of Justice in Washington, D.C., and the U.S. Attorney’s Office.