Ascension Health hospital and radiology group pay $1.6 million for Medicare fraud

Whistleblower lawsuit charges risky and unapproved procedures were performed

A western Maryland hospital, owned and operated by Ascension Health, and a radiology physicians’ group have agreed to pay the federal government $1.6 million to settle a whistleblower lawsuit that charged they had defrauded Medicare by billing for unnecessary and risky medical procedures and thousands of unnecessary radiology procedures.

The settlement involved Sacred Heart Hospital in Cumberland, Maryland; Tri-State Radiology P.C., which provides radiology services for the hospital; and Dr. Myung-Sup Kim, a radiologist who practices at Sacred Heart and is a partner in Tri-State.

The most serious charge was that Dr. Kim performed angioplasties and stenting of carotid arteries at Sacred Heart without Medicare approval. Those procedures are considered high-risk, "investigational" surgeries that Medicare allows only at certain large research hospitals – not at small, rural hospitals.

Sacred Heart did not have Medicare’s approval, but allowed the procedures and billed Medicare for them anyway. In addition, the lawsuit said, the procedures were medically unnecessary, and Dr. Kim and the hospital did not inform the patients that the procedures were high-risk.

During the angioplasties, a balloon catheter is inserted into the carotid artery to stretch the blood vessel to a larger diameter. Stenting involves inserting a stent to keep the artery open.

"Not only were these risky surgeries done at an unapproved place, they also were medically unnecessary," said Bonny Harbinger, a Washington, DC, attorney with Phillips & Cohen LLP, which represents the whistleblower.

The "qui tam" lawsuit, which the government joined, had been under seal, meaning it wasn’t available to the public until the settlement was announced and the seal was lifted. It was filed in 1999 in federal district court in Baltimore by Dr. Keith S. Pumroy, a radiologist who formerly was chairman of diagnostic radiology at Memorial Hospital in Cumberland.

Dr. Pumroy also was a partner in Centre Radiology, which merged with Summit Radiology to form Tri-State Radiology after Sacred Heart and Memorial Hospital merged in 1997. During the merger negotiations, Dr. Pumroy learned about billing irregularities by Sacred Heart Hospital and Summit Radiology. Aware that the merged entities would adopt those dubious billing practices, Dr. Pumroy refused any affiliation with them and instead moved to Pennsylvania.

"Dr. Pumroy chose to start a new practice in a new town rather than participate in fraud," Harbinger said. "For a well established physician to take such a step shows how wrong he thought they were."

The lawsuit said other ways that Sacred Heart, the radiology group and Dr. Kim defrauded Medicare to increase their Medicare revenues included billing for services that were not requested by the patients’ doctors and were medically unnecessary; billing separately for services that already were included in more comprehensive charges (known as "unbundling"); and charging for more expensive services when a less-expensive procedure had been performed ("upcoding"). For example, the lawsuit said:

• From 1996 to 2002, Sacred Heart, Memorial, Summit (later Tri-State), and Dr. Kim performed and billed Medicare for renal and abdominal angiograms that were not ordered by the patients’ treating physicians and were not medically necessary.

• From 1996 to 2000, Sacred Heart and Summit (later Tri-State) routinely billed Medicare for the more expensive diagnostic mammograms when they actually had performed screening mammograms.

• From 1996 to 1998, Sacred Heart and Summit routinely performed and billed Medicare for CT (computerized tomography) scans of the abdomen and pelvis when only abdmomen scans had been requested.

Sacred Heart Hospital will pay the bulk of the settlement, $1.1 million. Summit will pay $363,345; Centre and Tri-State together will pay $57,385.

Ascension Health owns Western Maryland Health System Inc., the corporation formed by Sacred Heart and Memorial Hospital when they merged. Ascension is one of the largest nonprofit hospital companies in the U.S., with 67 hospitals in 20 states and the District of Columbia.

Pumroy filed his qui tam lawsuit under the False Claims Act, which allows private individuals to sue companies that defraud the federal government and recover damages and penalties on the government’s behalf. "Relators," as the whistleblowers are known, are entitled to 15 percent to 25 percent of the funds the government recovers as a result of the lawsuit when the government joins the case.

Phillips & Cohen is the nation’s leading law firm in bringing qui tam cases on behalf of whistleblowers. Qui tam lawsuits brought by the firm’s attorneys have generated civil and criminal recoveries to the federal government totaling more than $2 billion.

Case referred to above is: U.S. ex.rel. Keith S. Pumroy v. Daughters of Charity, National Health System, Inc. et al., case no. WMN-99-2362 (D. Maryland).