The largest hospital system in Delaware has agreed to pay over $47 million to resolve claims made by a former compliance officer, a whistleblower, that it paid bribes to outside physicians in exchange for patient referrals, which led to false Medicaid invoicing.
Nearly seven years have passed since Ronald Sherman filed his whistleblower action against Christiana Care Health System, which was kept under wraps for more than a year, before the settlement was made public on Friday.
Employees of Christiana Care, including nurse practitioners, hospitalists, and physician assistants, were accused in the lawsuit of providing free or significantly less expensive treatment to patients referred by doctors who were not affiliated with CHSS.
After that, the outside doctors sent bills to insurers, mostly Medicaid, for services that Christiana staff members had actually rendered.
The lawsuit claims that the doctors continued to refer patients to Christiana Care instead of other hospitals in exchange for the unjustified billings.
The alleged fraud happened in two different departments of Christiana: the department of neonatology from April 2011 to September 2013, and the departments of cardiovascular surgery, urology, neurosurgery, and ear, nose, and throat from April 2011 to April 2017.
Authorities from the state and federal governments claimed that the plan broke both state and federal false claims legislation and anti-kickback regulations.
Sherman’s attorneys stated that comparable cases might be filed against other hospitals around the country and that the case is reportedly the largest False Claims Act settlement in Delaware history.
Dan Miller, lead attorney for Sherman, stated in a statement that “any other hospital in the country which operates under that model that led to this settlement should consider changing its practices immediately.”
Miller proposed that the programme was in part a response to new industry regulations that came into effect in 2003 and limited the amount of overtime that hospitals could demand of their medical residents.
“Many hospitals hired mid-level providers, like physician assistants and nurse practitioners, to fill the gap left behind by residents,” he said. “At Christiana Care, we claimed that private attending physicians, who held the authority to recommend patients to the hospital in the future, were billing for treatments rendered by mid-level clinicians. Stated differently, our allegations were that Christiana Care provided free employees as kickbacks to the private physicians.
Christiana Care will pay approximately $11 million to the state of Delaware and approximately $32 million to the federal government as part of the settlement; half of each sum will be used for restitution. With about $9 million from the federal government and $3 million from the state, Sherman will receive just over $12 million. Additionally, Christiana Care will provide Sherman’s lawyers $4.6 million.
Christiana Care spokesman Shane Hoffman stated in a statement that no culpability is admitted as part of the settlement.
The statement read, “We are happy to have this matter resolved as we move forward with addressing the changing health needs of the diverse communities we serve.”
A similar whistleblower lawsuit alleging Medicare and Medicaid fraud involving neurology doctors was settled for $3.3 million by Christiana Care in 2010. Christiana signed a “corporate integrity agreement” with the U.S. Department of Health and Human Services’ inspector general’s office as a condition of that settlement.
Among other things, the agreement mandated that Christiana continue to run initiatives to identify and promote internal reporting of possible legal infractions, such as those that forbid kickbacks and the referral of patients in exchange for money. Christiana was also expected to notify the authorities of any potential infractions and overpayments.
The lawsuit claims that after Sherman voiced concerns about dubious billing techniques that the hospital persisted in using despite the previous settlement, Christiana executives, including president and CEO Dr. Janice Nevin, stonewalled and marginalised Sherman. In 2014, Nevin sacked him.
“Mr. Sherman was required to look at issues with compliance. In an expert report ordered by Sherman’s counsel, former federal prosecutor Virginia Evans stated that “the mere fact that he was doing so appeared (to) cause a ‘problem’ for Dr. Nevin, which she was unable to explain during her deposition.”
