MedStar Health to Pay $35 Million to Resolve Kickback and Unnecessary Procedure Allegations

On March 21, 2019, MedStar Health, Inc. (“Medstar”), located in Columbia, Maryland, together with MedStar Union Memorial Hospital and MedStar Franklin Square Medical Center, both located in Baltimore, agreed to pay the United States $35 million to settle allegations that it paid kickbacks to MidAtlantic Cardiovascular Associates (MACVA), a cardiology group based in Pikesville, Maryland, in exchange for referrals.  MedStar also settled allegations that it received Medicare payments for medically unnecessary cardiac stents performed by John Wang, M.D., a one-time employee of MACVA who was later employed by MedStar.

Whistleblowers Join Forces and Lead to Settlement

Pursuant to the qui tam provisions of the False Claims Act, whistleblowers – also referred to as “relators” – with knowledge of fraud against the government may file a civil suit on behalf of the United States. Under the Act, the government can join and proceed with the lawsuit. In this case, the government did join, or “intervene” with the lawsuit. When the government intervenes in a False Claims Act case, the whistleblowers who originally brought the suit are entitled to receive 15-25% of the federal government’s recovery.

Allegations against MedStar were first brought in 2010, by three cardiac surgeons who practiced together as members of Cardiac Associates in Baltimore.  The cardiac surgeons alleged MedStar violated the False Claims Act and the Anti-Kickback Statute due to an illegal referral scheme.

Illegal Referrals Violate Anti-Kickback Statute and False Claims Act

The Anti-Kickback Statute – 42 U.S.C. 1320(a)-7b – prohibits the exchange (or offer to exchange), of anything of value, in an effort to induce (or reward) the referral of federal healthcare program business. If a physician makes a patient referral based on the incentives he may receive, the referral is tainted, and any federal funds paid for goods or services related to such a referral is a violation of the False Claims Act.  According to Maureen Dixon, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services, “patients rightly expect their doctors will make recommendations based on sound medical practice – not payoffs that too often result in needless and sometimes even harmful procedures.”

Medically Unnecessary Procedures Violate the False Claims Act

Later, in 2012, a group of whistleblowers who were former patients of John Wang, M.D. who claimed that Dr. Wang, MedStar, and Union Memorial engaged in a pattern and practice of performing medically unnecessary heart stent placement procedures and submitted false claims to Medicare for those procedures.

Those two cases were investigated by the United States Attorney Office for the District of Maryland and resulted in the $35 million settlement.  Commenting on the settlement, Robert K. Hur, the United States Attorney for the District of Maryland, stated that his office “will not tolerate medical care providers who put their patients at risk and waste taxpayers’ dollars in order to line their own pockets.”

Frohsin Barger & Walthall would like to thank and congratulate the U.S. Attorney’s Office for the District of Maryland, the Commercial Litigation Branch of the Justice Department’s Civil Division and U.S. Department of Health and Human Services, Office of Inspector General for their role in investigating this case and achieving this settlement.  Frohsin Barger & Walthall would also like to thank and congratulate the relators and their counsel for filing and prosecuting this case.  The relators in this matter were represented by Joseph Greenwald and Laake PA, in Greenbelt, Maryland and Smith Gildea and Schmidt LLC, in Towson, Maryland.

Read the full DoJ press release here.