A hospital in northeastern Kentucky reached a nearly $41 million settlement with the government Wednesday over claims that it made millions of dollars by falsely billing federal healthcare programs.
The settlement ends an investigation into what prosecutors called a practice by King's Daughters Medical Center in Ashland performing heart procedures that patients didn't need between 2006 and 2011. Prosecutors also said the procedures included unnecessary coronary stents and diagnostic catheterizations.
U.S. Attorney Kerry Harvey said the settlement is the largest of its kind involving a hospital in the Eastern District of Kentucky, which covers 67 counties. The settlement roughly doubles the amount of money King's Daughters received as a result of the alleged fraudulent billing.
"Treatment decisions motivated by financial gain undermine public confidence in our health care system and threaten vital federal programs upon which so many of our citizens rely," Harvey said.
A spokesman for King's Daughters did not immediately return a message.
The settlement covers only allegations of civil fraud. Kyle Edelen, a spokesman for the U.S. attorney's office, declined to comment on potential criminal charges based on the Department of Justice media policy.
The government said King's Daughters maximized reimbursements from Medicare and Kentucky Medicaid by billing for numerous procedures and that physicians falsified medical records in order to justify the unnecessary procedures.
The Commonwealth of Kentucky will receive more than $1 million, representing the state's share of Medicaid funds. The Medicaid program is funded jointly by the federal and state governments.
Perrye K. Turner, of the FBI's Louisville office, said schemes like the one outlined in the settlement take advantage of people who are vulnerable.
"The level of funds involved in this matter is staggering. This money has been stolen from the patients and the taxpayers," Turner said.
The settlement with the Ashland hospital is at least the fourth one this year in Kentucky that prosecutors have reached with a medical provider over allegations of false billings and claims. Edelen said those agreements are valued at more than $75 million.
Harvey said the conduct outlined in the settlement agreement violated the False Claims Act because under federal law, healthcare programs such as Medicare only reimburse providers for procedures that are deemed medically necessary.
The settlement also resolves allegations that the hospital violated the Stark Law by engaging in improper financial relationships with certain physicians. Prosecutors accused King's Daughters of paying some cardiologists salaries that were unreasonably high and in excess of fair market value. The government further contended that the cardiologists receiving these unreasonably high salaries referred their patients to King's Daughters for various services.
The Stark Law is aimed at limiting the influence of money on physicians' medical decisions by prohibiting financial relationships between hospitals and referring physicians, unless these relationships meet certain designated exceptions.