Staten Island University Hospital Settles, Again

From the New York Times comes the latest installment of the sorry story of Staten Island (NY) University Hospital:

Staten Island University Hospital has agreed to return $88.9 million that prosecutors say it fraudulently obtained from government health insurance programs, one of the largest settlements of such a claim ever paid by a single hospital.

The settlement, which prosecutors announced Monday, represents the third time in a decade that the hospital, which is the borough’s largest, has paid millions of dollars to resolve civil charges that it knowingly overbilled the government for treatment costs. Prosecutors had accused the hospital of conducting a collection of schemes from 1994 to 2005 that spanned many aspects of its operations, including substance abuse detoxification, inpatient psychiatric care, cancer treatment and the number of residents it had in training.

Two of the charges included in the settlement stemmed from separate whistle-blower lawsuits filed by a former doctor at the hospital and the widow of a cancer patient. Dr. Miguel Tirado, a former director of chemical dependency services at the hospital, accused the hospital of fraudulently billing the state Medicaid and the federal Medicare programs for inpatient alcohol and substance abuse detoxification treatment. Investigators determined that from July 1994 through June 2000, the hospital submitted claims for 12 more beds than it was licensed to use, and hid those beds from state inspectors. To settle those charges, the hospital agreed to return $11.8 million to the federal government and $14.8 million to New York State.

The other whistle-blower suit, filed by Elizabeth M. Ryan of Florida, accused the hospital of using the codes of a cancer treatment covered by Medicare to receive payments for treatment to her husband that was not covered. Investigators determined that the hospital used incorrect billing codes in cancer treatment from 1996 through 2004 to Medicare and Tricare, the United States military’s health insurance program. The hospital agreed to return $25 million to the federal government.

The settlement also resolved two other claims that were not yet the subject of lawsuits. Federal prosecutors said that from 1996 to 2003, the hospital had deliberately inflated its count of residents in training, which resulted in the hospital receiving reimbursements for which it wasn’t entitled. The hospital agreed to return $35.7 million.

Finally, the settlement resolved what prosecutors said were wrongful billings to Medicare and Medicaid for treatment of psychiatric patients in unlicensed beds from July 2003 through September 2005. The hospital agreed to repay the federal government nearly $1.5 million to settle that claim.

In 1999, the hospital entered a settlement with Eliot Spitzer, then the attorney general, to repay $45 million to Medicaid and to provide $39 million in free care for indigent patients. Mr. Spitzer had charged that from 1994 through 1998, the hospital provided therapy to developmentally disabled adults in rooms at group homes, but billed the services as outpatient hospital treatments, which Medicaid reimburses at a rate 10 times higher.

In 2005, Mr. Spitzer’s office negotiated a second settlement with the hospital that required it to return $76.5 million to Medicaid. Mr. Spitzer, who accused the hospital of overbilling through part-time community clinics, said at the time that the hospital’s own lawyers had warned its executives to stop, but the illegal billing continued nonetheless.

We had posted twice before on the 2005 settlement (here and here). It turned out that the former executive vice president of the hospital had been hailed as a leader with "gravitas" after he moved to his next job, which he subsequently quickly quit after his connection with the troubles at Staten Island came to light.

This story again reminds us how often the self-proclaimed leaders with "gravitas" of health care organizations are weighed down with other baggage. This is particularly pertinent during the week when the high priests of finance, the most exalted of the exalted leaders of business, have been shown to have foolishly and arrogantly over-reached. The push to break the medical guild and put managers without health care experience into the leadership of health care organizations unfortunately came at a time when such managers were growing up in a culture of greed, arrogance, and self-interest. So while high-paid chiefs of investment banks are brought low, it is time to rethink whom we have put in charge of health care.

The "Misconduct" of a Leader with "Gravitas,"

A follow-up on the story of Staten Island (NY) University Hospital's settlement of charges that it had defrauded the state Medicaid program....

According to the NY Times, it turns out that Joseph Pisani, the former Executive Vice President of State Island University Hospital, who was accused of involvement in the scheme to defraud Medicaid, had taken a position as Senior Vice President for financial planning and forecasting at troubled Westchester (NY) Medical Center in 2003, at a salary of $275,000. In 2004 he was promoted to Executive Vice President and Chief Administrative Officer, with a salary of $480,000. At the time, employees and union officials said this salary was excessive given the perilous financial condition of the institution. (The Journal News reported that the hospital has lost $200 million since 2002, and is projected to lose $60 million in 2005.) However, the Chair (in 2004) of the Westchester County Health Care Corporation defended Pisani's salary thus,

• "To get out of this thing, you need good troops, and Joe is really C.E.O material. He has that kind of gravitas and can think outside the box and can think of creative solutions."

Yesterday, when the story of the fraud settlement at Staten Island University Hospital, and Pisani's involvement in it was revealed, Westchester Medical Center fired him. Staten Island University Hospital had announced its regrets over its leaders' "misconduct."
OK, here comes my rant. How many times have we heard about the brilliance of health care leaders (often proclaimed by other health care leaders)? How many times have we heard about their intelligence, their vision, their ability to think outside the box? How many times have we heard about how their brilliant plans will improve care, lower costs, etc., etc.? And how many times do these predictions turn out to be wrong?
My favorite example of the over-hyping of health care leadership: In 1995, Sherif Abdelhak gave the prestigious Cooper Lecture at the American Association of Medical Colleges meeting, later published in the prestigious journal, Academic Medicine. In it he proclaimed how through his brilliant leadership, the Allegheny Health Education and Research Foundation was moving into the brave new world of large-scale integrated health care systems. (Remember, they were all the rage in the 1990's.) In 1997, the ACP Observer reported that Abdelhak was considered a "visionary." By 1998, AHERF was bankrupt, the second largest bankruptcy in the US at that time. Abdelhak was convicted of misappropriating charitable funds, and went to jail. (See my summary of the case here starting on page 5.)
So maybe the next time we hear that some top health care leader is "visionary," has "gravitas," or the ability to "think outside the box" of another, a high degree of skepticism is in order. Maybe we should look for leaders who display some modesty, humility, and realism, for a change.

New York Hospital Settles Fraud Charges Twice in Six Years

From the NY Times, Staten Island University Hospital has agreed to pay $76.5 million to settle claims that it fraudulantly billed the state's Medicaid program. This is the second time the hospital has been charged with over-billing Medicaid. In 1999, it paid Medicaid $45 million and agreed to provide free care worth $39 million to settle previous claims. New York Attorney General Elliot Spitzer also issued a criminal complaint against the hospital, but dismissed it in response to the settlement. Spitzer noted "the magnitude and depth of this fraud, and the willingness of the leadership there to tolerate it, was unusual."
The hospital was charged with billing Medicaid for clinic services at a higher rate allowed for clinics that are open only part-time, while it ran the clinics full-time. It was also charged with lying on state financial reports. The investigation found that the hospital had real-estate contracts with a doctor who was allegedly an associate of the Gambino crime family.
Hospital executives who were warned by their lawyer and the Department of Health, CEO Americo Varone, Executive Vice President Joseph Pisani, and Senior Vice President James Walsh, have left the hospital.
The hospital released a statement that "we deeply regret and are embarassed by the misconduct carried out by former executives of the hospital that led to this settlement."
This is just a reminder that pharmaceutical companies are hardly the only health care organizations accused of misconduct, nor are they necessarily responsible for the worst misconduct in health care.