CMC to pay $3.8 million to settle lawsuit alleging violation of the ‘False Claims Act’

In a statement the hospital said it "vigorously disagrees" with allegations that the arrangement, no longer in place, violated federal law.

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“CMC holds itself to the highest ethical standards in patient care and business conduct. That’s embedded in our mission and will always remain our highest priority,” according to a statement issued by the hospital Wednesday. File Photo

CONCORD, NH  – Catholic Medical Center will pay $3.8 million to settle claims it gave kickbacks to a Laconia cardiologist in exchange for her referring patients to the hospital and its New England Heart Institute, U.S. Attorney John J. Farley announced Wednesday.

CMC is accused of violating the civil False Claims Act by providing free call coverage services to the physician to induce patient referrals, in violation of the Anti-Kickback Statute. 

The settlement resolves allegations brought in a lawsuit filed in 2018 by a whistleblower, David Goldberg, M.D., a former CMC cardiologist, who is represented by Douglas, Leonard & Garvey, P.C.  Goldberg will receive $570,000 of the $3.8 million.  CMC also agreed to pay $145,361 for expenses, attorney’s fees and costs.

Attorney Chuck Douglas said every year millions of dollars in Medicare fraud money are returned to taxpayers through the reporting of misconduct by healthcare whistleblowers.

“Without their courage and persistence, those who rip us off would never be held accountable. Cardiologist David Goldberg did not look the other way when CMC management failed to do its job. The conduct set forth in his federal lawsuit is reprehensible and never should have been allowed to happen,” he said.

The U.S. Attorney issued a news release concerning the settlement but did not address other allegations in the whistleblower suit that included claims that CMC staff manipulated mortality data  (“discharging patients” after surgical procedures but “readmitting” them the same day to hospice with a new patient number so the deaths would not be attributed to surgical mortality, according to the lawsuit)  and providing substandard care.  One allegation concerned a 69-year-old woman who in 2017 was given a massive blood transfusion – a total of 125 units of blood, fresh frozen plasma and platelets — that had New England-wide ramifications in the blood bank supply.  The woman died a day later.  It also documents 10 patient deaths occurring between 2012 and 2018 which it alleged were the result of subpar medical care.

Lauren Collins-Cline, Director of Communications and PR for CMC, said the call coverage arrangement was put in place nearly 15 years ago “with the input of legal counsel in order to provide high-quality care for patients.  It is no longer in place.  While CMC vigorously disagrees with the government’s allegations that this arrangement violated federal law, we have agreed to settle in order to avoid long and costly civil litigation. CMC holds itself to the highest ethical standards in patient care and business conduct. That’s embedded in our mission and will always remain our highest priority.”

She said other claims, i.e. subpar care and manipulation of mortality rates, had no merit.

“The government investigated them and dismissed them,” she said in an email.  “Even the person who made these claims agreed to dismiss them in their entirety.”

Douglas, however, disputes that.

“The government did not say there was no merit to the other claims.  In fact, in the settlement agreement they specifically say they are not conceding the claims were unfounded, they were just settling the kickback claims,” Douglas said.

He said in the settlement agreement, CMC said it is not an admission of liability while the government said nor was it “a concession by the United States that its claims are not well-founded.” 

Farley, in an email, explained that when a whistleblower (also called a relator) files a lawsuit under the False Claims Act, the government has the option to intervene and pursue some or all of the claims alleged by the whistleblower.

“In this case, the United States only opted to pursue the kickback claims that are the subject of the settlement,” he wrote.  “When the United States declines to pursue some or all claims made by the whistleblower, the whistleblower may choose to go forward and litigate the remaining claims in the complaint.  In this case, the relator is declining to do so.  We expect all remaining claims to be voluntarily dismissed by the relator and the action to be dismissed in its entirety by the Court.“ 

The news release did not identify the doctor involved in the kickback scheme but the whistleblower lawsuit, which Judge Paul Barbadoro unsealed Wednesday in U.S. District Court, identified her as Dr. Mary-Claire Paicopolis.  Manchester Ink Link left a message requesting a comment from her but received no response.  

The government said CMC paid its own cardiologists to cover for her and to be available to provide medical services for her patients when she was on vacation or otherwise unavailable.  CMC provided the service at no charge.

Paicopolis referred millions of dollars in medical procedures and services over the decade she received the free service, according to the government.  CMC paid physicians willing to provide weekend and holiday coverage $10,000 per weekend and $3,000 per night, above market rate, according to the lawsuit.

Because CMC submitted claims for payment to Medicare, Medicaid and other federal health care programs for the service referred by the cardiologist, the U.S. alleged the claims were the result of unlawful kickbacks.

 The whistleblower lawsuit – which is posted below – alleges Paicopolis referred patients to perform procedures and that many of them had “marginal medical indications, and in some cases no justifiable indication at all.

It says Boston Scientific Corp. of Marlborough, Mass. became involved in the kickback scheme, providing device checks for the doctor who continued to bill for the services, according to the lawsuit.  In return, she insisted CMC implant only Boston Scientific devices in her patients, increasing the company’s market share at CMC. Paicopolis insisted CMC use Boston Scientific pacemakers and other devices on her patients. Sometimes they weren’t necessary, according to court documents.

Dr. Jamie Kim, the Heart Institute’s director of cardiac electrophysiology, earned $60,000 a year by promoting Boston Scientific’s products.  He became the company’s largest implanter of its subcutaneous cardioverter defibrillators, according to court filings.

In a report released Feb. 1 by the U.S. Department of Justice more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims against the government were obtained in the fiscal year ending Sept. 30, 2021. It is the second-largest annual total in False Claims Act history and the largest since 2014. Settlement and judgments since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $70 billion.

 “The False Claims Act and the Anti-Kickback Statute protect patients and federal health care programs from fraud and abuse by removing the corrupting influence of money,” said Farley. “When patients are referred for medical services, those referrals should be based solely on medical need and not affected by financial considerations. We work closely with our law enforcement partners to protect the integrity of federal health care programs and we will use all appropriate enforcement tools to combat health care fraud in New Hampshire.” 

“Kickback schemes can undermine our healthcare system, compromise medical decisions, and waste taxpayer dollars. As today’s settlement makes clear, the FBI will aggressively investigate those who seek to bolster their bottom line by paying illegal kickbacks—whether directly or indirectly—to circumvent safeguards designed to protect the integrity of federal health care programs,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division. 

CMC did not admit liability as part of this settlement agreement.

The Anti-Kickback Statute makes it illegal for a hospital to pay physicians in exchange for referrals of government-insured health care programs, such as Medicare, Medicaid, or Tricare. It arose out of congressional concern that remuneration given to those who can influence health care decisions would result in the provision of medically unnecessary services, or services of poor quality or otherwise harmful to patients. 

The False Claims Act permits whistleblowers to file civil lawsuits alleging that false claims have been submitted to the United States.

The case was investigated by the Office of Inspector General of the U.S. Department of Health and Human Services, the Office of Inspector General of the Department of Defense, and the Federal Bureau of Investigation. The case was handled by Assistant U.S. Attorney Raphael Katz.


 
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Pat Grossmith

Pat Grossmith is a freelance reporter.