Texas Hospital Remains in False Claims Act Soup

VICTORIA, Texas (CN) - Three cardiologists may be able to show that a Texas hospital paid kickbacks for Medicare and Medicaid patient referrals, and submitted bogus claims, a federal judge ruled.

Drs. Dakshesh Parikh, Harish Chandna and Ajay Gallaa had filed the suit under seal in August 2010 under the False Claims Act against Citizens Medical Center, a county-owned hospital in Victoria.

Hospital administrator David Brown and cardiologist William Campbell Jr. are also named as defendants in the action.

At the time the doctors were also suing the hospital for discrimination. They resigned from the hospital in December 2012 pursuant to a settlement in that discrimination case.

Two months later, U.S. District Judge Gregg Costa denied the U.S. government's request to keep the False Claims Act case sealed so it could determine if it should intervene.

Though the federal government declined to intervene at that time, it did file a motion of interest in the case.

The three cardiologists' allegations involve more than 24 doctors from six different specialties at the hospital: emergency room physicians, cardiologists, hospitalists, gastroenterologists, urologists and other doctors with unstated specialties.

They claim that each specialty group struck deals with Citizens Medical, in which they received additional pay or benefits in return for patient referrals in violation of the False Claims Act.

Additionally, the doctors say that Citizens Medical and its top brass knowingly submitted Medicare and Medicaid claims for unnecessary or worthless medical services.

Citizens Medical and its administrators moved to dismiss, arguing the doctors had not sufficiently pleaded their claims. Brown and Campbell also argued they are entitled to qualified immunity.

U.S. District Judge Gregg Costa preserved some claims Friday after focusing on how the False Claims Act works in combination with the Anti-Kickback Statute and the Stark Law.

The Anti-Kickback Statute stipulates criminal penalties for paying kickbacks for patient referrals when a federal health care program may cover the services.

The Stark Law bans hospitals from submitting Medicare and Medicaid claims based on referrals from doctors with whom the hospitals have a financial relationship.

Costa found the doctors' had made their case for evidence of False Claims Act violations for the hospital's dealings with all the groups, except the hospitalists.

The three doctors claim that other cardiologists saw their income more than double after they joined Citizens, even while their own practices were costing the hospital $400,000 to $1 million a year in losses.

"Even if the cardiologists were making less than the national median salary for their profession, the allegations that they began making substantially more money once they were employed by Citizens is sufficient to allow an inference that they were receiving improper remuneration," Costa wrote.

"This inference is particularly strong given that it would make little apparent economic sense for Citizens to employ the cardiologists at a loss unless it were doing so for some ulterior motive - a motive relators identify as a desire to induce referrals."

A central figure in the plaintiffs' claims is Yusuke Yahagi, the hospital's exclusive cardiac surgeon.

They say Citizens submitted false claims on the numerous worthless surgeries Yahagi performed, and that many of patients died after these operations.

Costa found that the claims involving Yahagi are "sufficient to state a claim against Citizens for AKS- and Stark-predicated FCA violations."

Brown and Campbell's bid for qualified immunity takes up 17 of the 63 pages in the ruling. Citizens did not return a request for comment.

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