KentuckyOne Health Hospital Settles Fraud Prosecution for $16.5 million.

Civil allegations of false or fraudulent billing at St. Joseph London Hospital for medically unnecessary heart procedures settled. Criminal investigation ongoing.

In the same week that KentuckyOne Health announced statewide layoffs of its employees, the Federal Prosecutor’s office of Eastern Kentucky announced the second largest settlement in history for its region. One can only speculate if the timing was a coincidence. Although the $16.5 million represents only a small portion of the $217 million target savings that KentuckyOne hopes to achieve, that self-insured institution is also facing hundreds of civil lawsuits. The hospital system and some of its doctors are paying a high price for someone’s bad behavior.

No doubt we will soon hear a statement from the hospital or its parent KentuckyOne that the settlement represents no admission of wrongdoing. Indeed the news release from the Federal Attorney uses the word “alleged” carefully, but in my opinion there can be no doubt that St. Joseph Hospital London, its doctors, or its managers should have known what was going on. The federal attorney minces no words. “We rely on healthcare providers to make treatment decisions based on clinical, not financial considerations. The conduct alleged in this case violates that fundamental trust and squanders scarce public resources set aside for legitimate healthcare needs.” The hospital billed federal programs for unnecessary major cardiac procedures, including angioplasty abuse and even coronary artery bypass.

The settlement also resolves allegations that St. Joseph’s entered into “sham management agreements” with the doctors who performed the unnecessary medical procedures. The hospital agreed to place itself under outside review of its billing for the next five years.

Several physicians who brought this “egregious fraud” to the government’s attention will receive a $2.5 million “finders fee.” The Commonwealth of Kentucky will recover $366,000 of Medicaid funds. Nothing is said about private insurers like Humana or Anthem, but they may go after St. Joseph London for recovery as well.

The University of Louisville will be a little embarrassed today too. The Associated Press account that spread this story throughout the nation tells us that a spokesperson for the University of Louisville Hospital will make an announcement about the settlement later today. The University was very anxious to get into bed with this partner. I wonder if it is having second thoughts upon arising this morning? The reputations of UofL and KentuckyOne will necessarily rise and fall together. I would like to think both instituitons deserve better.

I have been waiting for this shoe to drop, but would still like to know exactly what happened. In settlements like this, the nature and extent of wrongdoing may remain hidden from public view. I still maintain that the public has a right to know what really happened and why some people and institutions are being punished. Was the prosecution unfair? Were the motivations for bringing the claim appropriate? Were contemporaneous medical and business standards for the years of the alleged violations used as a basis for judgement? Because additional civil and criminal investigations are ongoing, we may not learn anything more for a long while or perhaps never.

Even today on its website, St. Joseph London claims to have the region’s top cardiologists and cardiovascular surgeons, and claims to be nationally recognized for high quality cardiovascular care. Something is not computing here. There is a major disconnect between the hospital’s legal problems and its marketing. Surely the hospital and its parent system want, and deserve, to have this matter put behind them. I understand that the hospital may be able to say little because of the impending malpractice and other lawsuits against it. I wish we could have full and honest disclosure, and a declaration of how things will be done better in the future. In the absence of that knowledge, a cloud hangs over everybody involved, including the community of London. No one deserves that.

Peter Hasselbacher
President, KHPI
Emeritus Professor of Medicine, UofL
January 28, 2014

3 thoughts on “KentuckyOne Health Hospital Settles Fraud Prosecution for $16.5 million.”

  1. Many “double dippers” in Louisville also. 2 cardiac caths for one patient instead of one that can perform interventions. Why we are at it they should investigate unnecessary consultations too. No wonder everyone else is paying for greediness.

  2. I am a cardiologist in Lexington and nobody here is surprised by this. We all wonder why it took so long. London cardiologists have been dirty for years. It all started with Chatterjee and hopefully his day of reckoning is coming. Next up for the feds – Kings Daughters Medical Center.

  3. I just got the full text of the actual settlement agreement as well as the original whistle-blower complaint that started it all. This saga if far from over. The depth and range of alleged malfeasance is staggering. The settlement agreement does not include all of the charges. I will report further on this when I catch my breath.

    Addendum: Please see the links to the documents here.
    PH

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