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Justice Department settles with hundreds of hospitals, 10 in Maryland, over defibrillators

Baltimore, MD -- ICD's, or implantable cardio defibrillators, made by several manufacturers, Medtronic, Boston Scientific, and St. Jude, are shown here at the University of Maryland Medical Center.

The U.S. Department of Justice has reached a $250 million settlement with 457 hospitals — including 10 in Maryland — related to cardiac devices that were implanted in violation of Medicare rules, the agency announced Friday.

It's one of the largest whistle-blower cases brought under the False Claims Act in terms of the number of defendants and the monetary recovery. It involved implantable cardioverter defibrillators, which detect life-threatening heart rhythms and treat them by shocking the heart back to a normal beat.


Hospitals were implanting them too soon after their patients' bypass surgery, angioplasty or heart attack, Justice officials said.

"While recognizing and respecting physician judgment, the department will hold accountable hospitals and health systems for procedures performed by physicians at their facilities that fail to comply with Medicare billing rules," Benjamin C. Mizer, head of the Justice Department's civil division, said in a statement. "We are confident that the settlements announced today will lead to increased compliance and result in significant savings to the Medicare program while protecting patient health."


The Centers for Medicare and Medicaid Services rules, first approved in 2003, say defibrillators can only be implanted 40 days after a heart attack and 90 days after bypass surgery or angioplasty. The rules are designed to give patients' heart function time to improve, possibly negating the need for a defibrillator, and were developed based on clinical trials and input from specialists, manufacturers and patient advocates.

The hospitals accepted no liability in the settlement and officials at the health systems maintain they gave their patients proper medical care but settled allegations to avoid further litigation.

The government settled with 70 health systems in 43 states, including:

•33 hospitals affiliated with Ascension Health, including St. Agnes Hospital in Baltimore, for $14.9 million;

•10 hospitals in the MedStar Health system, including Franklin Square Medical Center, Good Samaritan Hospital, Harbor Hospital and Union Memorial Hospital in the Baltimore area, as well as Montgomery General Medical Center in Olney and Southern Maryland Hospital Center in Clinton, for $5 million;

•13 hospitals in the Trinity Health system, including Holy Cross Hospital in Silver Spring, for $6 million;

•Peninsula Regional Medical Center in Salisbury for $2.9 million;

•17 hospitals affiliated with Catholic Health Initiative, including St. Joseph Medical Center in Towson, for $7.8 million.


St. Joseph was bought by the University of Maryland Medical System in 2012 after one of its star doctors was accused three years earlier of inappropriately performing another kind of cardiac procedure. Mark Midei was accused of improperly implanting stents in the arteries of hundreds of patients, leading to a federal investigation and financial problems for the facility. Midei was forced to leave the hospital and his medical license was revoked in 2011.

A spokeswoman for the university system deferred questions to Catholic Health.

"While the government's focus was on the billing criteria, our primary focus has always been to ensure that our patients are provided with appropriate care, and we are satisfied that appropriate care was, in fact, provided to our patients," Catholic Health said in a statement.

Other hospital systems whose facilities implanted defibrillators between 2003 and 2010 issued similar statements.

"We are pleased to have reached an agreement with the U.S. Department of Justice on this matter. We are proud and appreciative of the cardiac care provided by our physicians, nurses and other caregivers nationwide to individuals in the communities we serve," Ascension said in a statement.

"While MedStar did not agree with the government's theories, we concluded that resolving this matter was in the best interests of MedStar, our physicians and associates. We stand by our solid record and long history of providing the highest quality heart care to residents of Maryland and the Washington, D.C. region," said MedStar's statement.


"We remain confident that Trinity Health and our affiliated physicians acted appropriately and in the best interests of our patients. We settled this matter to avoid the additional legal and defense costs in what was already a 5-year investigation and the potential disruption to our mission of caring for our patients and communities," said Trinity Health's statement.

"PRMC believes that good clinical decision-making was exercised in the [defibrillator] cases reviewed and that everyone associated with our hospital or the care of those patients acted in the best interest of our patients and without any intent to disregard … regulations," said Dr. CB Silvia, Peninsula Regional's vice president of medical affairs and chief medical officer.

Silvia also said the system wanted Medicare to reconsider the rules that put doctors in "the very difficult dilemma of trying to do the right thing for their patients while recognizing that the right thing may not be covered by the payer."

The Medicare rules are appropriate for most patients most of the time, said Dr. Alan Cheng, a cardiologist and associate professor of medicine at the Johns Hopkins University School of Medicine. Neither he nor Hopkins was involved in the settlement.

But, Cheng said, there are times when it doesn't make sense to wait, such as when a patient's heart function is so poor he's scheduled for a defibrillator implant but has a heart attack before surgery. Other times a patient has a heart attack and function isn't likely to improve, and doctors want to implant both a pacemaker and a defibrillator immediately.

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In that case the patient would have to have two procedures to comply with the defibrillator rule. And Medicare does not allow doctors to call and preauthorize exceptions like private insurers. That would be too cumbersome for the massive health program for seniors, he said.


In "gray zone" cases, Cheng said he often waits to avoid running afoul of Medicare rules, sometimes employing an external defibrillator, which patients find very uncomfortable.

"No question there are some bad apples out there," he said of hospitals performing unnecessary procedures. "But I don't think these are all cases of health care fraud as the Department of Justice seems to imply."

The government's case stems from a complaint filed seven years ago by two whistle-blowers from Louisville, Ky., Leatrice Richards, a registered cardiovascular nurse and Medicare-compliance and reimbursement consultant, and Thomas Schuhmann, also a consultant. They will be awarded more than $38 million from the settlement funds.

The number of defibrillator procedures on Medicare patients has dropped 28 percent since the Justice investigation began, according to the pair's Atlanta-based attorney, Bryan Vroon.

Justice officials "work is critically important to ensuring that Medicare patients receive needed treatment based on science," he said.