St. Joseph Medical Center Agrees to Pay $22 Million to Resolve False Claims Act Allegations in Connection with Kickbacks Paid to MidAtlantic Cardiovascular Associates

Settlement Includes Repayment of Money Received for Medically Unnecessary Stents

November 9, 2010

BALTIMORE, MD – St. Joseph Medical Center (“SJMC”) in Towson Maryland agreed to pay $22 million to settle allegations under the False Claims Act that it paid unlawful remuneration under the Anti-Kickback Act and violated the Stark Law when it entered into a series of professional services contracts with the Pikesville, Maryland based cardiology group, MidAtlantic Cardiovascular Associates (“MACVA”).

The settlement was announced by United States Attorney for the District of Maryland Rod J. Rosenstein, Assistant Attorney General Tony West of the Civil Division of the Department of Justice; Special Agent in Charge Nicholas DiGiulio, Office of Inspector General of the Department of Health and Human Services, Office of Investigations; Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service - Mid-Atlantic Field Office; and Special Agent in Charge Drew Grimm of the Office of Personnel Management - Office of Inspector General.

The allegations resolved in the settlement include the payment of kickbacks to MACVA under the guise of professional services agreements, in return for MACVA’s referrals to SJMC of lucrative cardiovascular procedures, including cardiac surgery and interventional cardiology procedures, over the period from January 1, 1996 to January 1, 2006. The settlement agreement resolves issues relating to eleven professional services agreements between MACVA and SJMC under which MACVA received payments above fair market value, for services not rendered or that were not commercially reasonable and were entered into for the purpose of inducing referrals by MACVA to SJMC.

Under the settlement the hospital also agrees to repay monies it received from federal health benefit programs between January 1, 2008 and May 12, 2009 for medically unnecessary stents performed by Mark Midei, M.D., a one time partner in MACVA who was later employed by SJMC.

“Kickbacks give doctors an incentive to pursue unnecessary treatments that are costly and sometimes even dangerous to patients,” said United States Attorney for the District of Maryland Rod J. Rosenstein. “Medical care providers are prohibited from giving or receiving kickbacks because of the risk that they will put their own financial interests ahead of their patients’ interests.”

“Kickbacks for medical services undermine the integrity of our health care system,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “When hospitals put their own financial interests ahead of the best interests of patients, we will take action.”

“Payoffs to influence health care decision-making too often result in inappropriate, unnecessary and harmful medical practices” said Daniel R. Levinson, Inspector General of the Department of Health and Human Services. “OIG is committed to protecting patients from needless medical procedures, such as the insertion of unnecessary cardiac stents -- as is alleged in this case.”

The settlement resolves a lawsuit brought by whistleblowers, Stephen D. Lincoln, M.D., Peter Horneffer, M.D. and Garth McDonald, M.D., cardiac surgeons who practiced together as members of Cardiac Surgery Associates in Baltimore, Maryland. The lawsuit, which was filed in the District of Maryland in June, 2010 under the qui tam provisions of the False Claims Act, alleges that SJMC violated the Anti-Kickback Act, Stark Law and the False Claims Act by paying various forms of illegal remuneration to MACVA to induce referrals of patients insured by federal health care programs for cardiac procedures.

Drs. Lincoln, Hornefer and McDonald brought their suit under the qui tam provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Under the civil settlement announced today, the relators will receive a portion of the federal share of the recovery.

Saint Joseph's also signed a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General (HHS-OIG), which requires SJMC to ensure accurate billing and appropriate relationships with referral sources, and addresses patient care issues. The CIA also requires the hospital to, among other things, appoint physician executives to oversee medical staff quality-of-care matters.

The settlement announced today was the result of an investigation by the U.S. Attorney’s Office for the District of Maryland and the Commercial Litigation Branch of the Justice Department’s Civil Division with assistance from the U.S. Department of Health and Human Services, Office of Inspector General; the Department of Defense Office of the Inspector General, Defense Criminal Investigative Service; and the Office of Personnel Management, Office of Inspector General. The case was handled by Maryland Assistant U.S. Attorney Jamie M. Bennett.

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