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Analysis

Wheeling Hospital to Pay $50M to Settle Stark, Anti-Kickback Allegations

By John Commins  
   September 09, 2020

The settlement does not mandate a standard, five-year monitoring agreement for the hospital, nor an admission of wrongdoing on the hospital's part.

Wheeling Hospital, Inc., will pay $50 million to settle whistleblower False Claims Act allegations that the West Virginia hospital violated the Anti-Kickback Statute and the Stark Law prohibiting physician self-referrals, the Department of Justice said.

Federal prosecutors had alleged that between 2007 and 2020 R&V Associates, Ltd., former managers of the 223-bed acute care hospital, "systematically violated the Stark Law and Anti-Kickback Statute by knowingly and willfully paying improper compensation to referring physicians that was based on the volume or value of the physicians’ referrals or was above fair market value," DOJ said in a media release.

The settlement began as whistleblower complaint filed in 2017 by Louis Longo, a former executive vice president of Wheeling Hospital, who will receive $10 million of the settlement. DOJ intervened in the suit in 2019.

The fraud scheme allegedly began in 2007 after Wheeling Hospital hired CEO Ronald Violi, and R&V Associates to engineer a financial turnaround.

R&V Associates then allegedly employed many physicians to snag referrals, boost revenues, and grow market share.

The federal complaint also alleged that Wheeling Hospital paid millions of dollars to doctors based on referrals, including some who were paid annual salaries in excess of $1 million, and closely tracked the revenues physicians were generating under the referral scheme.

When Longo raised concerns about the scheme, Violi fired him. R&V Associates sued Longo after the whistleblower complaint was made public, claiming he did not disclose the scheme through internal hospital channels. 

"Intimidation is a scare tactic often used against whistleblowers," said Longo's attorney, Jeffrey W. Dickstein, with Phillips & Cohen LLP.

Wheeling Hospital Responds

Wheeling Hospital CEO Douglass Harrison said the settlement "was in the best interest of the long-term viability of the hospital and the community."

"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 healthcare continues to be provided in the Upper Ohio Valley," he said.

Since the suit was filed, the Wheeling Hospital dumped R&V Associates, signed a management agreement with WVU Health System, and named Harrison the new CEO. 

"The settlement will not impede the hospital’s focus on patient care or its commitment to compliance, ethical conduct and integrity," Harrison said, adding that the settlement does not mandate a standard, five-year monitoring agreement, nor an admission of wrongdoing on the hospital's part.

The Stark Law prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has a financial relationship, unless that relationship satisfies one of the law's statutory or regulatory exceptions.

The Anti‑Kickback Statute prohibits paying physicians to refer services covered by Medicare, Medicaid, and other federal healthcare programs.

“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 healthcare continues to be provided in the Upper Ohio Valley.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

Photo credit: Mark Van Scyoc / Shutterstock


KEY TAKEAWAYS

DOJ alleged that, between 2007 and 2020 R&V Associates, Ltd., former managers of the 223-bed hospital, "systematically violated the Stark Law and Anti-Kickback Statute."

The settlement began as whistleblower complaint filed by a former executive vice president of Wheeling Hospital, who will receive $10 million of the settlement.

The fraud scheme allegedly began in 2007 after Wheeling Hospital hired CEO Ronald Violi, and R&V Associates to engineer a financial turnaround.

R&V Associates then allegedly employed many physicians to snag referrals, boost revenues, and grow market share.


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