Saint Joseph London: Unnecessary Cardiac Procedures and Kickbacks

Saint Joseph Health System agreed to pay $16.5 million in the Saint Joseph London cardiac fraud settlement over allegedly unnecessary cardiac procedures and payments for referrals. The Justice Department’s January 2014 announcement alleged that the hospital knew patients were receiving invasive treatment they did not need.

Invasive Procedures the Hospital Allegedly Knew Were Unnecessary

The allegations covered coronary stents, pacemakers, coronary artery bypass graft surgery and diagnostic catheterizations billed to Medicare and Kentucky Medicaid. Saint Joseph Hospital in London, Kentucky, was part of Saint Joseph Health System, which operated hospitals across the state.

The local government announcement described unnecessary treatment from 2008 into 2011. It alleged that doctors performed procedures patients did not need and the hospital billed the government programs for them.

In the government’s account, patients received invasive procedures they did not need, and taxpayers paid for them.

Hospitals generally received $10,000 to $15,000 for procedures such as heart stents, the local announcement reported at the time. Each clinical decision could therefore produce a substantial hospital payment.

The Clinical Record Behind a Cardiac Procedure Claim

In the separate EMH Regional and North Ohio Heart false claims case, the government alleged that patients with heart disease underwent unnecessary angioplasty and stent placement even though their blood vessels were insufficiently occluded to require those procedures. The allegation turned on whether their blockages called for those particular interventions. A former cath lab manager, who had managed the hospital’s catheterization and electrophysiology laboratory, brought that whistleblower case.

Blessing Hospital shows where the hospital bill enters. Its settlement concerned Medicare and Medicaid payments for the facility component of cardiac catheterizations involving allegedly unnecessary coronary stents. The physician performed the procedure, and the hospital’s own payment was part of the case.

The payment structure helps explain that exposure. Medicare pays a facility fee and a reduced professional fee for a service in a hospital outpatient department, while the same service in a physician’s office receives a single professional fee. A referral can therefore bring the hospital revenue beyond the physician’s work.

The Management Agreements Behind the Referrals

The London settlement also covered alleged referral payments through sham management agreements. According to the Justice Department, Cumberland Clinic had an exclusive arrangement to provide cardiology services to the hospital’s patients beginning in 2008. The government alleged that management agreements financially benefited the clinic’s two physician owners to encourage them to send more patients to Saint Joseph.

The Justice Department alleged violations of the Stark Law and the Anti-Kickback Statute. Its local announcement connected those arrangements directly to the bills, saying Medicare and Medicaid should not have paid claims resulting from the improper financial relationship.

The hospital’s interest in the referral stream is familiar to anyone who works with service-line finances. Physician relationships can feed imaging, laboratory work and surgery. That is part of why hospitals buy physician practices, and it explains why the financial relationship deserves attention alongside the clinical decision here. In the government’s account of London, management payments helped bring patients through the door, and unnecessary procedures generated claims once they arrived.

Three Lexington Cardiologists Brought the Saint Joseph Case

Three cardiologists from Lexington, Kentucky, brought the qui tam case. The Justice Department said the government actions stemmed largely from their complaint and announced a combined whistleblower award of $2.46 million from the hospital settlement.

At the time of the hospital settlement, the government joined the case against Cumberland Clinic, its two physician owners and their earlier practice groups over allegedly unnecessary procedures and tests.

The local announcement said that before the whistleblowers filed, Saint Joseph had voluntarily disclosed that one of its cardiologists had performed medically unnecessary coronary stents. The settlement described a broader set of allegations involving other cardiac procedures, hospital awareness and referral arrangements.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Here, clinical expertise helped bring a case about the hospital’s billing and financial relationships to the government.

Falsified Charts and Disguised Referral Payments at Other Heart Programs

King’s Daughters Medical Center in Ashland, Kentucky, agreed to pay $40.9 million in a separate settlement announced on May 28, 2014. The government alleged unnecessary coronary stents and diagnostic catheterizations, and that physicians falsified medical records to justify the cardiac procedures. It also alleged that certain cardiologists received salaries above fair market value.

St. Joseph Medical Center in Towson, Maryland had its own case involving alleged referral payments and unnecessary stents. Its corporate integrity agreement required an independent review of cardiac catheterization procedures for medical necessity and appropriateness. The review reached the clinical decisions behind the bills.

The whistleblowers’ complaint in that Maryland case made the description of the paid work part of the allegation: Midatlantic, it said, used its power over referrals to force the hospital to pay kickbacks presented as outcomes data research and managed care guidance.

The alleged exchange had the vocabulary of ordinary hospital services. That makes the work behind a management agreement worth understanding: what the hospital paid for, what was actually delivered and how the recipients could direct patients.

What the London Settlement Changed

Saint Joseph agreed to a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. It required substantial internal compliance changes and an outside review of claims submitted to federal health care programs.

What Hospital Insiders May Recognize Beyond Stents

The connection between treatment, payment and management’s response also appears in cases involving other devices and surgery. Desert Regional Medical Center and Tenet settled allegations about unnecessary cardiac loop recorders implanted in patients. At CHI Franciscan and St. Joseph Medical Center in Tacoma, the settlement concerned hospital billing for spinal surgery at more levels than necessary and medically unnecessary spinal fusions.

Sanford Health connects surgeon device ownership to colleagues’ warnings. The government alleged that a neurosurgeon’s colleagues repeatedly raised concerns about unnecessary procedures involving implants in which he had a financial interest. Sanford allegedly continued employing him, allowing him to profit from the devices and billing federal healthcare programs for the surgeries despite those warnings. For someone who saw a hospital receive and respond to clinical objections, that is a concrete example of why the response matters.

When the Hospital Knows About the Cardiac Care

If you heard clinical objections reach hospital leadership and saw the procedures continue, speak to one of our whistleblower experts about how the hospital responded. We connect your clinical knowledge with the claims and referral arrangements to build your strongest hospital whistleblower case. We stay with you through the case and bring in whistleblower lawyers who know cardiac billing and physician payment arrangements.