MedStar Health to pay $35 million to settle allegations of a kickback scheme

MedStar Health has agreed to pay $35 million to resolve allegations that the hospital system paid kickbacks to a cardiology group in Pikesville in exchange for referrals, Robert Hur, the U.S. attorney for Maryland, and other federal investigators announced Thursday.

The settlement under the False Claims Act involves MedStar Union Memorial Hospital and MedStar Franklin Square Medical Center, both Baltimore-area hospitals.

Officials say MedStar paid MidAtlantic Cardiovascular Associates the kickbacks under the guise of professional service agreements with the hospitals. In return, the cardiovascular office referred patients to Union Memorial for lucrative procedures from Jan. 1, 2006, to July 31, 2011.

The settlement also resolves allegations that MedStar received Medicare payments from Jan. 1, 2006, to Dec. 28, 2012, for medically unnecessary stents performed by a doctor who was an employee of the cardiovascular office and was later employed by MedStar.

The cardiovascular practice is no longer operating. MedStar denied any wrongdoing in a statement.

“We fully cooperated with the government’s investigation of these matters and ultimately determined that it was best to settle these matters in order to avoid protracted and distracting litigation,” according to the statement. “Importantly, the two cases have been settled without any findings of liability. MedStar has full confidence in our quality assurance and compliance programs, and we remain fully focused on advancing our patient care mission.”

The initial lawsuit was brought in 2010 by whistleblowers who were cardiac surgeons practicing at Cardiac Surgery Associates in Baltimore. The settlement also resolves another whistleblower lawsuit filed in 2012 by patients of Dr. John Wang.

The patients claimed the doctor, MedStar and Union Memorial performed medically unnecessary cardiac procedures involving artery-opening stents and submitted false claims to Medicare for those procedures.

Wang remains chief of the cardiac catheterization laboratory at MedStar Union Memorial and scientific director for Baltimore Cardiovascular Research. A MedStar official said he was unavailable to comment.

The investigation involved the U.S. attorney’s office, the U.S. Justice Department’s Civil Division and the Department of Health and Human Services’ Office of Inspector General.

“Kickbacks give doctors an incentive to pursue unnecessary treatments that are costly and sometimes even dangerous to patients,” Hur said in a statement. “We will not tolerate medical care providers who put their patients at risk and waste taxpayers’ dollars in order to line their own pockets.”

The whistleblowers will receive a share of the money recovered through the settlement.

Another area hospital also settled a major lawsuits filed in Baltimore and federal courts involving stent cases during the same era. St. Joseph Medical Center agreed in 2014 to pay up to $37 million to resolve allegations from years before that a cardiologist there, Mark G. Midei, placed hundreds of unnecessary stents in patients.

The doctor was not named in the lawsuits and denied wrongdoing, but he lost his medical license after a state Board of Physicians investigation. The Towson hospital, owned by Catholic Health Initiatives until the University of Maryland Medical System bought it in 2012, also did not admit to any wrongdoing.

meredith.cohn@baltsun.com

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