Hospital Pays $41 Million to Settle Claims of Unnecessary Heart Procedures

A hospital in northeast Kentucky agreed to pay one of the largest settlements to date in the federal crackdown on unnecessary cardiology procedures. King’s Daughters Medical Center in Ashland will pay the U.S. $41 million to settle charges under the False Claims Act that it overpaid physicians so they would refer heart patients to the hospital for lucrative procedures. The incentives drove “hundreds” of unnecessary cardiac catheterizations and stentings at the facility from 2006 to 2011, according Kerry Harvey, the U.S. Attorney for the Eastern District of Kentucky.

King’s Daughters is at least the 12th hospital since 2006 to settle federal allegations that it billed public health programs for needless stents and related misdeeds. Stents, the tiny coils inserted into arteries with catheters to prop open coronary blockages, can save lives of heart-attack victims. Their use in stable patients is in dispute among medical researchers.

The $41 million settlement, which did not include any admission of fault by the hospital, is among the largest obtained by the government in unnecessary-stenting cases. It is nearly double the $22 million federal settlement in 2010 with St. Joseph Medical Center of Towson, Md., and the $17 million settlement this January with another St. Joseph Medical Center in London, Ky. In all, three interventional cardiologists have been sentenced to federal prison for doing unnecessary procedures.

In the King’s Daughters case, the Appalachian-area hospital is cooperating with prosecutors “in developing a full understanding of the circumstances” of the abuses, said Harvey, the U.S. attorney. The Ashland area ranked No. 4 out of 1,768 U.S. districts in the number of stent-related procedures per 1,000 Medicare enrollees in 2010, according to an analysis by researchers affiliated with Dartmouth College in Hanover, N.H. King’s Daughters has the only cardiac-stenting facility in the town of 22,000 residents. In addition to the federal allegations, now settled, 523 patients have filed civil claims in state court against the hospital and Dr. Paulus for being given unneeded interventions, according to Hans Poppe, the Louisville attorney who represents the plaintiffs.

The hospital’s main cardiologist, Richard E. Paulus, who retired last summer, remains under criminal investigation for doing unnecessary stentings and other interventions, according to an attorney involved in the case. Paulus, a beloved doctor in the Ashland area for years, is the namesake of the heart center at King’s Daughters. The hospital’s settlement agreement said its cardiologists knowingly falsified records to justify giving patients unnecessary procedures.

“Paulus is absolutely innocent of any wrongdoing and will vigorously contest any charges,” said his attorney, Robert S. Bennett of Hogan Lovells in Washington, D.C. “I’ve never felt so comfortable about a case in my life.”

Tom Dearing, a spokesman for King’s Daughters, said in an e-mailed statement that the hospital settled the case to avoid draining valuable resources. Its heart center earned high marks in outside reviews, he added.

King’s Daughters “needs to turn the page” with “intensive rehabilitation work” supervised by a corporate integrity agreement it signed as part of the federal settlement, said Harvey. “We all need to play by the rules, particularly when we’re talking about invasive procedures.”

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