Towson hospital settles kickback claims

St. Joseph Medical Center has agreed to pay $22 million to settle federal claims that it engaged in a decade-long kickback scheme with Pikesville cardiology group MidAtlantic Cardiovascular Associates, which was co-founded by Dr. Mark G. Midei — the cardiologist accused of performing hundreds of unwarranted medical procedures at the Towson hospital.

Included in the settlement, which was announced Tuesday by the Maryland U.S. attorney's office, is the repayment of federal funds that St. Joseph received for "medically unnecessary" coronary stents placed by Midei after he had left MidAtlantic to become a full-time St. Joseph employee with a seven-figure salary.


In a statement, St. Joseph said it "reached the agreement without admitting liability in order to avoid the expense and uncertainty of litigation and to allow the medical center to move forward." MidAtlantic, the region's premier cardiology practice, did not respond to a request for comment.

St. Joseph was accused of paying MidAtlantic kickbacks — disguised as payments for services — in exchange for patient referrals for "lucrative cardiovascular procedures" from 1996 to 2006, when Midei was a partner there, according to the 17-page settlement agreement.


St. Joseph also "submitted false claims for medically unnecessary stent procedures performed by Dr. Mark Midei," the document states.

"Kickbacks give doctors an incentive to pursue unnecessary treatments that are costly and sometimes even dangerous to patients," Rod J. Rosenstein, U. S. attorney for the District of Maryland, said in a statement. His office declined to say how much of the settlement relates to unnecessary stent procedures.

More than 100 patients have filed malpractice claims against the hospital and Midei, who was removed from duty in May 2009 under suspicion that he had falsified patient records to justify unneeded stent procedures. A physician oversight board has since filed charges against him, and

could restrict or remove his medical license.


Midei filed a lawsuit against St. Joseph last month, claiming that officials there ruined his reputation by warning nearly 600 patients about his work. He has denied all allegations against him.

His attorney, Stephen L. Snyder, said Tuesday that the settlement says nothing about his client.

"This is a recognition that St. Joe acted improperly … it has no acknowledgement as to Dr. Midei," Snyder said, adding that he believes Midei was set up to avoid a larger fine.

To reduce "the magnitude of the penalty, these two entities threw Midei under the bus because he was the guy doing the most stents," Snyder said. "But he also was the most competent and he did the most difficult ones."

Stents are used to prop open blocked arteries and improve blood flow, and Midei is considered by those in his field to be exceptionally skilled at placing them. St. Joseph recruited him from MidAtlantic based on his performance in January 2008, though the hospital had already worked with him for years on a contract basis.

The kickback and unnecessary-procedure claims came to light through the efforts of three whistle-blower doctors who have spent the past four years working with the government, according to their Baltimore attorney, J. Stephen Simms.

Drs. Peter Horneffer, Stephen Lincoln and Garth McDonald were employed by Cardiac Surgery Associates, which filed a lawsuit that's still in court against MidAtlantic in 2001 alleging that the business steered patients away from CSA surgeons.

In 2005, a Baltimore County jury found in a separate civil case that two MidAtlantic doctors, including Midei, had done just that, fraudulently sending a man away from his CSA surgeon to another physician employed by MidAtlantic. The jury levied a $5 million judgment against MidAtlantic in that case, which has since been reopened.

Through the lawsuits, the doctors learned of the alleged kickback situation, which they say further squeezed CSA surgeons, and began working with federal investigators, Simms said.

Simms raised questions about the level of care St. Joseph patients received.

"When there are kickbacks, the patient isn't referred based on the quality of the physician; the referral is based on the amount of the kickback," Simms said.

In a statement, Daniel R. Levinson, inspector general of the Department of Health and Human Services, said, "Payoffs to influence health care decision-making too often result in inappropriate, unnecessary and harmful medical practices."

He added that "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 federal investigation led to the ouster of three St. Joseph officials in May last year, along with Midei, who was removed from duty after the hospital initiated a review of his clinical practice "based on a patient complaint and the federal government's civil investigation," St. Joseph has said.

The hospital, which has revamped its physician oversight practices, reached an "agreement in principle" to settle the government's claims in July 2009, though it wasn't finalized until Tuesday, when the last signature was applied to the agreement.

The three whistle-blowers will share nearly $2.8 million of the settlement.

Once the settlement has been paid, the federal government will release St. Joseph from "any civil or administrative monetary claim the United States has or may have under the False Claims Act" and other laws.

It does not resolve any claims by or against individuals, and it doesn't preclude criminal charges. In fact, it requires that St. Joseph "cooperate fully" in the U.S. investigation of individuals not a party to the agreement.

St. Joseph President and Chief Executive Jeffrey K. Norman said in a statement that St. Joseph has cooperated "from the start of the U.S. Attorney's inquiry."

"Medical Center leadership operated from the belief that a cooperative and transparent approach guided by its faith-based system best served the interests of its patients and community and reflects our mission and values," Norman said.

The hospital is owned by Denver-based Catholic Health Initiatives, which has given St. Joseph a loan so the hospital can afford the settlement, which will be paid via electronic transfer by the end of the week, according to the agreement.

St. Joseph said it also signed a five-year Corporate Integrity Agreement with the Office of the Inspector General within the U.S. Department of Health and Human Services.

"The [agreement] helps ensure that all conduct and activity going forward is in compliance with all regulations governing health care," St. Joseph said in a statement.

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