Catholic Medical Center: Free Call Coverage for a Referring Cardiologist

Catholic Medical Center agreed to pay $3.8 million to settle call coverage kickback allegations involving free coverage for the referring physician. The hospital allegedly paid its own cardiologists to cover that physician’s patients, then billed government health care programs for business she sent its way. In the government’s account, the money went to the covering doctors, while the free service went to the physician sending business to the hospital.

Catholic Medical Center Call Coverage Kickbacks

The Manchester, New Hampshire, hospital allegedly supplied free call coverage for a referring cardiologist during vacations and other absences. According to the government, its own cardiologists supplied the care and availability at no charge to the referring physician.

The U.S. Attorney’s Office for the District of New Hampshire announced the settlement on February 9, 2022. The government alleged that the cardiologist sent millions of dollars in procedures and services to Catholic Medical Center during the decade she received the free coverage. It said the hospital’s resulting claims to Medicare, Medicaid and other federal health care programs came from unlawful kickbacks.

The whistleblower’s complaint put a price on the labor the hospital allegedly bought:

The alleged rates show what the hospital was willing to spend on coverage. The referring physician’s alleged benefit was receiving that coverage without paying for it. That is the part of the arrangement a payroll total alone would miss: the doctor receiving the benefit and the doctor receiving the payment were different people.

Why Free Coverage Has Referral Value

Hospital physician noncash kickbacks can take the form of work someone else pays for. Catholic Medical Center’s alleged arrangement supplied coverage to a referral source at the hospital’s expense.

The 2017 Journal of AHIMA article Busting Bad Medicine: A Call to Action Addressing Healthcare, Fraud, Waste, and Abuse describes how kickbacks can steer patients, distort medical decisions and disadvantage competitors who do not buy referrals. In this case, the government connected the free service to the Anti-Kickback Statute and the hospital’s claims for payment. In the government’s account, the hospital paid for the referring doctor’s coverage, then billed taxpayers for the business she sent back.

There is a business reason a hospital values that referral stream. Medicare pays a facility fee and a reduced professional fee for services in a hospital outpatient department, compared with a single professional fee in an office. Downstream referrals also feed imaging, laboratory and surgical volume. Against that background, the government’s description of a decade of business alongside free coverage explains why the arrangement mattered beyond the call roster.

What the Coverage Records Would Show

A call roster shows who covered the patients. Payroll shows who got paid. Our work with an insider connects those entries to the referring practice’s benefit and the business the hospital expected in return.

Hospital kickbacks and physician compensation concern why the hospital bought the service as well as what it paid.

A concrete industry example is Ozarks Community Hospital’s compliance plan. It calls for compensation to reflect the work and the need for it, considers total compensation and benefits, and flags payments tied to hospital or department revenue. It also calls for written service agreements with compensation specified in advance.

The 2023 paper Types of Hospital Frauds: Nature and Methods of Prevention, in the Journal of Forensic and Investigative Accounting, explains why this can be difficult to see. Patients usually do not pay providers directly. Insurers and government programs process bills through codes, contracts and payment rules. The paper also describes how collusion can defeat checks that depend on people reviewing one another independently.

In this alleged coverage arrangement, the connection runs across staffing, payments and referrals. Someone who approved the coverage may understand its purpose in a way the payment entry cannot convey. That is where an insider’s account can give the documents meaning.

The Cardiac Referral Pattern

The Christ Hospital allegedly used access to billable work as a referral benefit. The government said cardiologists’ contributions to hospital revenue determined their access to its outpatient Heart Station, where they could earn additional income. Catholic Medical Center’s alleged benefit relieved the referring physician of a cost. The Christ Hospital’s alleged benefit opened an opportunity to earn.

At UPMC Hamot and Medicor, the government alleged that services agreements bought referrals even though the hospital lacked a legitimate need for the services, with some work duplicated or never performed. At St. Joseph Medical Center in Towson, the allegations likewise concerned cardiac referrals and agreements involving excessive pay, unperformed services or work without a reasonable business purpose.

These comparisons sharpen the question behind free call coverage. Who needed the service, who received its value, and why did the hospital agree to pay? An agreement’s description of the work is only part of that story.

Rent, Staffing and Other Benefits

Pacific Alliance Medical Center settled for $42 million over alleged physician office rent above fair market value and marketing arrangements that benefited physicians’ practices. The Justice Department’s announcement said the manager who brought the case would receive more than $9.2 million from the federal recovery. Here the alleged benefit included rent paid to the referring doctors. At Catholic Medical Center, it was coverage supplied to them.

The staffing comparison is especially close at Dunes Surgical Hospital. The government alleged that hospital funding paid athletic trainers whose work generated referrals to a physician group and the hospital. Its allegations also included free or discounted clinic space, staff and supplies for another physician group. Again, the person receiving a salary and the practice benefiting from the expense need not be the same recipient.

The benefit can also sit elsewhere in the accounts. Fresno’s physician lounge amenities featured in a referral settlement, while OASIS Hospital’s alleged benefit was convertible-bond interest paid to a physician group. Trinity Hospital’s rental payments to two referring physicians allegedly exceeded fair market value.

When the Benefit Is Hospital Ownership

Physician hospital ownership tied to minimum patient contacts featured in the Texas Heart Hospital qui tam case: the government alleged an annual 48-patient-contact requirement for owners. At Flower Mound Hospital, the government alleged that older physician share buybacks led to resales to younger physicians, with hospital physician shares allocated by referral volume or value.

The Complaint Also Alleged Benefits Tied to Devices

The whistleblower’s complaint also alleged an exchange involving device checks and device selection. It said Boston Scientific representatives checked implanted cardiac devices, including other companies’ devices, without the physician present and sometimes while she was off site. According to the complaint, the physician continued billing for those checks, often involving Medicare patients, and insisted that Catholic Medical Center use Boston Scientific devices for her patients in return.

Other passages alleged that Boston Scientific paid two device implanters to oversee implants and give presentations, and supplied the hospital with billing and coding advice, in return for device orders. Those allegations put another recognizable set of hospital relationships in view: vendor access, physician work for a device company, purchasing decisions and the hospital’s billing support.

These allegations raise the same question about who benefits from a service and what business follows it.

The Whistleblower’s Share of the Settlement

A former Catholic Medical Center employee who is a physician brought the qui tam case. The settlement announcement said that the physician would receive a portion of the settlement. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Who Was the Hospital Really Paying For?

If you scheduled, worked or approved that kind of coverage, you may know what referrals the hospital expected in return. Speak with our whistleblower experts about the coverage arrangement you know. We connect your knowledge of the staffing, payments and referral decisions to build your strongest hospital kickback case, bring in hospital fraud whistleblower lawyers, and stay beside you through the case.