MedStar Health to Pay $35M to Settle Kickback Allegations

MedStar Health and two affiliates allegedly paid kickbacks to a cardiovascular surgeons group under the guise of professional services agreements.

MedStar Health Inc. and two affiliate hospitals will pay the federal government $35 million to resolve whistleblower allegations that the health system paid illegal kickbacks to a cardiology group in exchange for patient referrals, the Department of Justice said.

"Kickbacks give doctors an incentive to pursue unnecessary treatments that are costly and sometimes even dangerous to patients," Robert K. Hur, U.S. Attorney Robert for the District of Maryland.

"We will not tolerate medical care providers who put their patients at risk and waste taxpayers' dollars in order to line their own pockets," Hur said.

According to federal prosecutors, between 2006 and 2011 Columbia, Maryland-based MedStar Health, and Baltimore-based affiliates MedStar Union Memorial Hospital and MedStar Franklin Square Medical Center allegedly paid kickbacks to MidAtlantic Cardiovascular Associates under the guise of professional services agreements.

MedStar also agreed to settle allegations that it received Medicare payments from Jan. 1, 2006, through Dec. 28, 2012, for medically unnecessary stents performed by John Wang, MD, a one-time employee of MACVA who was later employed by MedStar.

The settlement resolves a lawsuit brought by three whistleblowers physicians: Stephen D. Lincoln, MD; Peter Horneffer, MD; and Garth McDonald, MD, cardiac surgeons who practiced together as members of Cardiac Surgery Associates in Baltimore.

The settlement also resolves a lawsuit brought by former patients of Wang, who claimed that Wang, MedStar, and Union Memorial knowingly performed medically unnecessary percutaneous transluminal coronary angioplasty with stent placement procedures and submitted false claims to Medicare for those cardiac stent procedures.

Under the civil settlement, the whistleblowers will receive a portion of the federal share of the recovery.

MedStar Health Responds

MedStar Health issued a statement noting that it denied "all wrongdoing."

"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," MedStar said.

"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."