Monday, May 02, 2011

The Continuing Parade of Legal Settlements by Health Care Organizations: Cardinal, Cerberus, Dartmouth-Hitchcock, Masonicare

Here is our latest round-up of the more colorful legal settlements made by some US health care organizations.

Cardinal Health

Cardinal Health is a pharmaceutical services company. Per the Kansas City Star:
A pharmaceutical distributor has settled a federal anti-kickback lawsuit by agreeing, in part, to pay $760,000 to former Kansas City Chiefs player Dan Saleaumua and a consultant.

That money is part of an $8 million settlement that Cardinal Health Inc. of Ohio agreed to pay the U.S. government to settle the lawsuit.

The lawsuit alleged that Cardinal offered Saleaumua and consultant Kevin Rinne an illegal $440,000 kickback so it could supply prescription drugs to seven Kansas City area Medicine Shoppe pharmacies that Saleaumua owned at the time.

Cerberus Capital Management/ Dyncorp/ Steward Health Care

This will require some explanation. Cerberus Capital Management now owns Steward Health Care, mostly composed of what was formerly known as Caritas Christi hospital system of Massachusetts, and a large group of physician practices now known as Caritas Christi Network Services (see posts here and here). Cerberus Capital Management now also owns DynCorp (see their web-site), which has been called one of the "leading mercenary firms," by an article in the Nation.

As reported by Bloomberg about DynCorp, and hence indirectly about Cerberus, and Steward Health Care:
DynCorp International Inc., the largest U.S. contractor in Afghanistan, agreed to pay $7.7 million to resolve allegations it submitted inflated claims for construction work in Iraq, the U.S. said.

The Justice Department said yesterday that DynCorp and its subcontractor, The Sandi Group, will settle a whistleblower case filed in federal court in Washington. The Sandi Group, accused of submitting false claims on a police-training contract in Iraq, will pay more than $1 million.

'The hard work of stabilizing Iraq is challenging enough without contractors and subcontractors inflating the cost of rebuilding by making false claims at taxpayers’ expense' Assistant Attorney General Tony West, who oversees the department’s civil division, said in an e-mailed statement.

DynCorp inflated the costs of building camps at various locations in Iraq, the U.S. said.

Dartmouth-Hitchcock Medical Center

Dartmouth-Hitchcock Medical Center is a prestigious medical center. Per the New Hampshire Union-Leader:
Dartmouth-Hitchcock Medical Center has settled a case of alleged billing fraud to various federal health programs, such as Medicare, Medicaid and Veterans Affairs.

DHMC, which denied any liability in the matter, agreed to pay $2,227,075. The federal government recovers $1.5 million, Vermont $80,396, and New Hampshire $61,541, the U.S. Attorney for the District of Vermont announced Tuesday.

The investigation began in 2007 following a complaint filed by Dr. Thomas J. Prendergast, who was a physician in the DHMC pulmonary department in Lebanon. The complaint alleged the hospital improperly billed federal health care programs for services performed by resident staff without sufficient supervision by physicians. Regulations allow physicians to bill for certain services by resident staff, but only if the services are performed in the presence of a physician.

The investigation, conducted with the hospital's cooperation, found alleged improper billing in the anesthesiology department, pain clinic and radiology, according to the government. The billings at issue were from 2001 to 2007.


Masonicare is a not-for-profit "senior services provider." Per the Meriden (CT) Record-Journal:
A settlement agreement was reached today where Masonicare Health Center will pay the government almost $450,000 to resolve allegations the facility violated the False Claims Act, according to an announcement from U.S. States Attorney David B. Fein.

Fein explained the allegations against the senior-focused inpatient and outpatient health care facility involved improper billing to Medicare and Medicaid for injections of leuprolide acetate, or Lupron. The medication is used to treat prostate cancer in men and endometriosis and fibroids in women. The billing code for the female-related dosage has a higher reimbursement rate than the code for male-related doses, according to the statement.

The government alleges that Masonicare regularly billed for the female-related code for male patients who were being treated for prostate cancer, so they received a substantially higher reimbursement than it should have received, according to the statement.

Further, the government alleges that in 2009, the company realized it had improperly coded the Lupron injections services but never self-disclosed its improper bulling to the government or made any attempt to pay the money back to the Medicare and Medicaid programs, Fein said.


So in the last 10 days or so, we have seen legal settlements of charges of kickbacks by a pharmaceutical services provider, submitting inflated claims to the federal government made by a subsidiary of a private equity group which also owns a large hospital system and group of physicians' practices, billing fraud by an academic medical center, and false claims by a senior health care services provider. 

I begin to think that if we keep this blog going long enough, the parade of legal settlements will include the majority of US health care organizations.  Again, such legal settlements serve as markers of the scope of bad behavior by a wide variety of health care organizations, including some of the largest and/or most prestigious, but also including many organizations that work regionally or at the community level.  Bad behavior indicated by these settlements seems so prevalent that it must be an important reason for the chronic problems that afflict US health care, rising costs, diminishing access, and stagnant quality.  However, it still seems to be politically incorrect to discuss such mismanagement, malfeasance and/or corruption as important causes of US health care problems. 

Although sometime in the past there may have been a general societal understanding that health care organizations ought to be held to the highest standards, and ought to be lead by people with the best character and of the best reputation, now one seldom hears an expression of shame when such organizations settle claims alleging fraud, over-billing, etc, etc, etc.

Like nearly all such cases we have previously reported, none of these cases seemed to involve any negative consequences for any persons who authorized, directed, or implemented the questionable acts.  While the fines involved may seem large to ordinary folk, they are not big enough to markedly affect the organizations involved.  So the parade of legal settlements has had little deterrent effect. 

Once again, I say: we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable.

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