Justice News

Department of Justice
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Tuesday, November 9, 2010

St. Joseph Medical Center in Maryland to Pay U.S. $22 Million to Resolve False Claims Act Allegations

Facility Allegedly Violated Anti-Kickback Act

BALTIMORE – St. Joseph Medical Center (SJMC) in Towson, Md., has agreed to pay the United States $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, Md., based cardiology group, MidAtlantic Cardiovascular Associates (MACVA), the Justice Department announced.

The allegations resolved in the settlement include the payment of kickbacks to MidAtlantic under the guise of professional services agreements, in return for MACVA’s referrals to the medical center of lucrative cardiovascular procedures, including cardiac surgery and interventional cardiology procedures, over the period from Jan. 1, 1996, to Jan. 1, 2006. The settlement agreement resolves issues relating to 11 professional services agreements between MidAtlantic and St. Joseph 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 settle allegations that it received from federal health benefit programs between Jan. 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.

The settlement was announced by Tony West, Assistant Attorney General of the Justice Department’s Civil Division; Rod Rosenstein, U.S. Attorney for the District of Maryland; Nicholas DiGiulio, Special Agent in Charge, Office of Inspector General of the Department of Health and Human Services, Office of Investigations; Roger Craig, Special Agent in Charge of the Defense Criminal Investigative Service - Mid-Atlantic Field Office; and Jill Maroney, Special Agent in Charge of the Office of Personnel Management - Office of Inspector General.

"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."

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. The lawsuit, which was filed in the District of Maryland in June 2010, 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 or whistleblower provisions of the False Claims Act, which permit private citizens with knowledge of false claims 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.

"Kickbacks give doctors an incentive to pursue unnecessary treatments that are costly and sometimes even dangerous to patients," said U.S. Attorney 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."

Saint Joseph's also signed a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). It requires SJMC to engage in activities that will help ensure accurate billing and appropriate relationships with referral sources. The CIA also addresses patient care issues by requiring the hospital to: appoint physician executives to oversee medical staff quality-of-care matters; hire a Peer Review Consultant to evaluate SJMC’s peer review practices; and engage an Independent Review Organization to perform a Cardiac Catheterization Procedures Review, evaluating and analyzing the medical necessity and appropriateness of interventional procedures performed at SJMC. The hospital is subject to exclusion from Federal health care programs, including Medicare and Medicaid, for major noncompliance with this CIA and subject to stipulated penalties for less significant noncompliance.

"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 Federal 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 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.

Press Release Number: 
Updated September 15, 2014