A West Virginia hospital has agreed to pay $50 million to settle a Medicare fraud lawsuit filed against it, including a $10 million whistleblower award.

The U.S. Justice Department announced earlier this month that Wheeling Hospital, Inc. in Wheeling, West Virginia, will make the payout to resolve allegations it paid kickbacks and intentionally submitted Medicare claims for improper doctor referrals. The violations, which involved the False Claims Act, Stark Law and Anti-Kickback Statute – were said to have taken place over a span of 13 years.

Some of the doctors were said to have earned millions of dollars through the scheme, the Associated Press reported.

Although it has agreed to pay to settle the case, the hospital has admitted no wrongdoing.

Whistleblower Led to Lawsuit, Settlement

Former Wheeling Hospital Executive Vice President Louis Longo was the first to shine a light on the alleged wrongdoing. He filed a whistleblower complaint against the hospital in 2017. In it, Longo said Wheeling Hospital “systematically violated the Stark Law and Anti-Kickback Statute by knowingly and willfully paying improper compensation to referring physicians … based on the volume or value of the physicians’ referrals,” a statement issued September 9 by the U.S. Attorney’s Office for the Western District of Pennsylvania said.

According to the Justice Department, the referrals were made from 2007 to 2020, under the management of R&V Associates, Ltd. and Ronald Violi.

“Some physicians received compensation totaling more than $1 million a year under the system, according to the complaint,” the Associated Press said.

The Stark Law forbids hospitals from billing Medicare for certain services “referred” by physicians the hospital has a financial relationship with. The Anti-Kickback Statute makes it illegal to compensate or offer to compensate a medical professional to induce them to refer items or services for coverage by Medicare.

“Improper inducements made to physicians can interfere with medical decision-making and undermine the public’s trust in the health care system,” Special Agent in Charge Maureen R. Dixon said in the Justice Department’s announcement. Dixon is with the Department of Health and Human Services Office of Inspector General.

The False Claim Act takes aim at those who would defraud the government by making it illegal to file false claims, such as for Medicare coverage.

Law Provided for Whistleblower Award

The False Claims Act includes a “qui tam provision,” which allows private citizens to file  lawsuits on behalf of the federal government against anyone believed to have committed Medicare fraud. The government has the right to intervene and join the action, but if it declines, the Medicare fraud whistleblower can proceed alone.

In the Wheeling Hospital case, the Justice Department got involved in 2018.

In the event of a settlement, or at the end of a successful False Claims Act trial, the law allows for the whistleblower to receive a financial award for bringing the case forward. According to the National Whistleblower Center, the whistleblower award component of the False Claims Act is useful in that it “provides the greatest incentive for the whistleblower while exposing information that the government would not be able to detect on its own.”

Longo, thanks to the False Claims Act, is slated to get a $10 million whistleblower award from the Wheeling Hospital settlement.

Hospital’s Reaction to Settlement

Wheeling Hospital is a 223-bed facility owned by the Roman Catholic Diocese of Wheeling-Charleston. In July, CEO Douglass Harrison revealed the hospital had suffered considerable financial losses over the last two years — $18 million this year and $11 million last year – and was “looking for a long-term strategic partner for its ultimate survival,” the Associated Press reported.

In his own statement about the settlement, Harrison said the deal was in the best interest of the hospital and the community it serves.

“Prolonging the lawsuit would have paralyzed the ability of the hospital to attract the best physicians and to make the necessary capital improvements to ensure that the highest quality health care continues to be provided in the Upper Ohio Valley,” he said.

Department of Justice Officials Praise Settlement

Bill Powell, U.S. Attorney for the Northern District of West Virginia, was quoted in the Justice Department’s announcement supporting the deal with Wheeling.

“Our office is committed to ensuring that health care providers in the Northern District of West Virginia abide by the law,” he said. “We are pleased this settlement will enable Wheeling Hospital to resolve these prior False Claims Act violations and continue to provide a full range of healthcare services to patients in the area.”

The Wheeling Hospital Whistleblower Lawsuit is Louis Longo, et al. v. Wheeling Hospital, Inc., et al., Case No. 19-cv-192 in the U.S. District Court for the Northern District of West Virginia.

This article is not legal advice. It is presented
for informational purposes only.