Earlier this year, the Department of Justice (DOJ) announced that Wheeling Hospital, Inc. agreed to pay $50 million to resolve allegations that it violated the False Claims Act by knowingly submitting claims to Medicare that resulted from violations of the Stark Law and the Anti-Kickback Statute.
According to the DOJ, Wheeling Hospital, an acute care hospital located in Wheeling, West Virginia, “systematically violated the Stark Law and Anti-Kickback Statute by knowingly and willfully paying improper compensation to referring physicians that was based on the volume or value of the physicians’ referrals or was above fair market value” from 2007 to 2020. These actions were taken under the direction and control of its prior management, R&V Associates, Ltd., and Ronald Violi.
According to the complaint, Wheeling Hospital (under the former management company) paid several physicians annual compensation above a million dollars based on the volume or value of their referrals. The complaint also repeatedly referenced an internal hospital memo that found the physician practices of Wheeling Hospital were operating at a loss because of the excessive salaries, but the hospital should keep the salaries as they are so as not to endanger downstream revenue (i.e., the referrals) generated by the physicians.
Physicians who were overpaid included physicians from a variety of specialties, including obstetricians and gynecologists, radiation oncologists, cardiologists, and pain management physicians.
The case was initially brought by Louis Longo under the qui tam provisions of the False Claims Act. Longo, a former Executive Vice President of Wheeling Hospital, filed a whistleblower complaint in 2017 alleging that the hospital violated the Stark Law and the Anti-Kickback Statute. The DOJ intervened in March 2019 to join the suit. Longo will receive $10 million of the settlement.
As we often see, the claims resolved by this settlement are allegations and there has been no determination of liability.
Countersuit
Something we don’t see happen very often, but that happened in this case, is a countersuit was filed against the whistleblower by the hospital! In March 2019, Wheeling filed a countersuit against Longo, alleging that Longo breached his fiduciary duty and process. The hospital tried to argue that because of Longo’s role as an Executive Vice President, he had a fiduciary duty to the hospital but he never raised any concerns about Stark or Anti-Kickback violations until after his position was terminated. Several months later, in June 2019, the hospital dropped its countersuit.
No CIA Required
In this case, the hospital has taken several steps in an attempt to prevent similar actions to those alleged by the government from happening. For example, the hospital entered into a management agreement with WVU Health System (WVUHS) and named a new CEO, Douglass Harrison. The hospital also added a “robust corporate compliance program with WVUHS.”
At least in part because of the significant leadership changes at the hospital, the settlement does not require a five-year corporate integrity agreement (CIA) that is normally required in cases like this.
Reactions to the Settlement
“Improper financial arrangements between hospitals and physicians can influence the type and amount of health care that is provided,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department is committed to taking action to eliminate improper inducements that can corrupt the integrity of physician decision-making and drive up healthcare costs.”
Wheeling Hospital CEO Douglass Harrison released a statement, saying, “The settlement was in the best interest of the long-term viability of the hospital and the community. Prolonging the lawsuit would have paralyzed the ability of the hospital to attract the best physicians and to make the necessary capital improvements to ensure that the highest quality health care continues to be provided in the Upper Ohio Valley.” Harrison also noted that the “settlement will not impede the hospital’s focus on patient care or its commitment to compliance, ethical conduct and integrity.”