St. Joseph Medical Center, Towson: The Referral Deals and the Stents Under Scrutiny

The $22 million St. Joseph Towson stent and kickback settlement covered alleged payments for cardiac referrals and federal payments for medically unnecessary stents. The government alleged that the hospital bought referrals through professional services agreements with a cardiology practice. For someone inside a cardiac service, the case reaches both the contracts that bring patients through the door and the decisions about what happens to them afterward.

The Justice Department announced the agreement on November 9, 2010, with St. Joseph Medical Center in Towson, Maryland, agreeing to pay the United States. The referral-payment and stent allegations covered different periods. Three cardiac surgeons brought the whistleblower case. The hospital’s response also reached beyond billing: it agreed to outside scrutiny of cardiac procedures and its own peer review.

Eleven Services Agreements Allegedly Bought Cardiac Referrals

The government alleged that St. Joseph paid kickbacks for cardiac referrals through eleven professional services agreements with MidAtlantic Cardiovascular Associates, a cardiology group in Pikesville, Maryland. The referral allegations covered January 1, 1996 to January 1, 2006 and included cardiac surgery and interventional cardiology procedures that the government described as lucrative.

According to the Justice Department, the agreements paid MidAtlantic more than fair market value, paid for work that was never performed, or lacked a reasonable business basis. The government alleged that their purpose was to induce referrals, in violation of the Anti-Kickback Statute and the Stark Law.

The whistleblowers’ complaint gives that arrangement a much more concrete shape:

The promised products were guidance and research. In the whistleblowers’ account, what the hospital was paying for was access to the practice’s patients.

The hospital has its own revenue at stake when a referred patient arrives for treatment. Medicare pays inpatient hospital care by the admission and outpatient care by the encounter, under different payment systems. The referring physician’s business and the receiving hospital’s business meet at that patient. The hospital could earn money from the care those referrals brought through its doors.

The Stent Allegations Concerned a Later Period

The hospital also settled allegations about payments from federal health care programs for medically unnecessary stents between January 1, 2008 and May 12, 2009. The physician who performed the procedures had been a partner in MidAtlantic before becoming a St. Joseph employee.

The referral allegations concerned why the hospital paid the practice. The stent allegations concerned why federal programs paid the hospital for the procedures. The alleged harm reached patients who received stents they did not need, while federal programs paid for those procedures.

St. Joseph’s separate $4.9 million settlement, announced in 2013, concerned medically unnecessary hospital admissions.

Cardiac Oversight Put Peer Review Under Outside Scrutiny

St. Joseph’s corporate integrity agreement required review of the care itself as well as changes directed at accurate billing and appropriate referral relationships. The agreement was with the Department of Health and Human Services Office of Inspector General.

The hospital had to appoint physician executives to oversee medical staff quality of care. It also had to hire a peer review consultant to assess how its own peer review worked. That second requirement matters: the reviewers’ process came under scrutiny along with the physicians’ work.

An independent review organization would carry out a Cardiac Catheterization Procedures Review to assess whether interventional procedures were medically necessary and appropriate. The question went beyond whether the hospital billed for a procedure that occurred. It reached whether the patient needed that procedure in the first place.

Other Hospital Unnecessary Stent Fraud Cases

Other hospital unnecessary stents fraud cases show how specific the clinical allegation can become. At EMH Regional Medical Center and North Ohio Heart Center, the government alleged that patients had heart disease but their vessels were not blocked enough to warrant the angioplasty and stent procedures performed. The patient’s diagnosis and the need for a particular intervention were separate questions.

At King’s Daughters Medical Center, the government alleged that physicians falsified medical records to justify unnecessary coronary stents and diagnostic catheterizations. The allegation reached the explanation recorded for the care as well as the care itself.

Blessing Hospital adds the hospital-payment side. Its settlement followed a voluntary disclosure and addressed Medicare and Medicaid payments for the facility component of cardiac catheterizations involving allegedly unnecessary coronary stents. The hospital’s own claim was at issue, not just the physician’s bill. That is the financial connection a hospital employee may see even when someone else makes the treatment decision.

A Different Saint Joseph in Kentucky

The Saint Joseph London cardiac fraud settlement concerned Saint Joseph Hospital in London, Kentucky, a separate hospital and case. Its health system agreed to pay $16.5 million in 2014 over allegations involving unnecessary cardiac procedures and sham management agreements that rewarded referrals.

That case included stents, pacemakers, bypass surgery and diagnostic catheterizations on Medicare and Medicaid patients who allegedly did not need them. The government also alleged that the hospital knew about the unnecessary procedures. The resemblance to Towson is the combination of referral payments and questions about the care those patients received.

Three Cardiac Surgeons Brought the Towson Case

The three whistleblowers practiced together at Cardiac Surgery Associates in Baltimore. Their qui tam case alleged that St. Joseph paid MidAtlantic to induce cardiac referrals of patients covered by federal healthcare programs. The settlement provided for the surgeons to receive a portion of the federal recovery.

Their complaint also described how referrals allegedly moved away from their practice. They alleged that MidAtlantic physicians steered patients to the group’s own surgeons by falsely telling patients or their families that the independent surgeons were retired or unavailable. The complaint said patients were not told that MidAtlantic stood to collect additional fees from surgery performed by its recommended surgeons.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Here, the whistleblowers’ knowledge came from cardiac surgery, and their allegations reached the business relationships directing patients to that care. That combination is what makes this case useful to someone who understands both the service and the arrangements behind it.

What You Saw in the Cardiac Service

You may know why a hospital kept paying a referring practice and how it handled concerns about the cardiac procedures that followed. Speak with our whistleblower experts about those payments and treatment decisions. We build your strongest hospital whistleblower case with you and bring in whistleblower lawyers who know hospital cardiac billing and referral payments, staying at your side through its resolution.