Hospital Settles Fraudulent Medicare Claims

Defendants Admit Practices Resulted in Submission of Several Million Dollars of Inappropriate Claims to Medicare

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Scott J. Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General (“HHS-OIG”) New York Regional Office, announced today that the United States filed and settled a civil fraud lawsuit against LENOX HILL HOSPITAL (“Lenox Hill”) and its corporate parent NORTHWELL HEALTH, INC. (“Northwell”) (together, “Defendants”).  The Government’s Complaint-in-Intervention (the “Complaint”) alleges that Defendants violated the False Claims Act by fraudulently billing Medicare for healthcare services that did not comply with Medicare law.  The Complaint specifically alleges that in conjunction with Defendants’ employment of Lenox Hill’s former chair of the Department of Urology, David B. Samadi (“Samadi”), Defendants submitted claims for: (1) endoscopic procedures that were performed, at least in part, by insufficiently supervised medical residents; (2) robotic surgeries for which, at some point during the surgery, Samadi left the patient improperly unattended in order to supervise a different surgery; (3) medically unnecessary hospital services; and (4) designated health services referred to Lenox Hill by Samadi when his compensation arrangement violated the federal Stark Law.

Under the settlement, approved by U.S. District Judge Denise Cote, Defendants agreed to pay $12.3 million to resolve the allegations in the Complaint.  As part of the settlement, Defendants also admitted, acknowledged, and accepted responsibility for conduct alleged in the Complaint, including that “Defendants’ practices resulted in the submission of several million dollars of inappropriate claims to Medicare.”

Manhattan U.S. Attorney Geoffrey S. Berman said: “Patients put great trust in hospitals, particularly when it comes to surgery.  Hospitals cannot pay surgeons for their referrals, and they cannot run their operating rooms like assembly lines.  Defendants prioritized maximizing their own revenues over regulatory compliance.  This Office will not tolerate such behavior, and today’s settlement makes clear that the Government will hold hospitals accountable when they engage in such misconduct.”

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “Lenox Hill Hospital elected to increase their profits by paying handsomely for referrals without any regard to patient care – ultimately violating Medicare rules and regulations.  The Medicare program is designed to protect both beneficiaries and taxpayers.  We will continue working with our law enforcement partners to enforce these rules.”

As alleged in the Complaint, from July 2013 through June 2018 (the “Covered Period”), Samadi oversaw Lenox Hill’s Department of Urology, including the training of its medical residents.  During Samadi’s tenure, Defendants encouraged and facilitated surgical practices that violated Medicare’s rules and regulations that govern a teaching physician’s presence and availability during both endoscopy and high-risk, complex surgery.  Although Medicare allows teaching institutions to utilize medical residents in the provision of surgical care, the law requires that a board certified senior surgeon provide adequate supervision.  Throughout the Covered Period, in order to maximize the revenues that Samadi generated for Lenox Hill, Defendants allowed Samadi to engage in an overlapping surgical practice wherein he was insufficiently available to provide the supervisory oversight required by Medicare.  Specifically, Defendants would schedule Samadi to perform two separate surgeries, one endoscopic and one robotic, at the exact same time.  During the course of the two surgeries, a medical resident would remain with the patient undergoing an endoscopic procedure or operation.  Meanwhile, Samadi himself would travel back and forth between the endoscopic room, and an adjacent operating room in which Samadi conducted high-risk, complex, surgeries utilizing a surgical robot.  This practice not only violated Medicare law, it also violated Northwell’s own resident supervision policy – and it resulted in Defendants’ submission of false claims.  Moreover, Samadi’s patients were never informed that their surgeries were scheduled to overlap with another of Samadi’s scheduled surgeries.

Samadi’s operating room practices also resulted in the submission of medically unnecessary claims.  In a further effort to maximize Samadi’s availability to perform revenue-generating surgeries, Defendants allowed Samadi to perform minor diagnostic procedures in a Lenox Hill operating room.  Operating room services, such as the services provided by operating room nurses and/or anesthesiologists, were medically unnecessary in the case of these minor procedures.  Nonetheless, in conjunction with the minor diagnostic procedures that Samadi’s patients underwent in a Lenox Hill operating room, Defendants submitted claims to Medicare for the medically unnecessary operating room services provided.  These unnecessary services were also ineligible for Medicare reimbursement.

Lastly, Defendants submitted claims for health services that violated the Stark Law.  The Stark Law is a federal law that prohibits a hospital from receiving Medicare reimbursement for services referred by a physician with whom the hospital has a prohibited financial relationship.  The law is intended to prevent conflicts of interest in physician referrals.  Throughout the Covered Period, Defendants paid Samadi a guaranteed salary of over two million dollars each year, as well as an annual incentive bonus of an additional two to five million dollars each year.  This compensation grossly exceeded fair market value because it factored in the value of Samadi’s referrals to Lenox Hill.  In addition, in calculating Samadi’s incentive bonus, Lenox Hill included revenues from services not personally performed by Samadi.  This inclusion of non-personally performed services in a physician’s incentive compensation also violated the Stark Law.  Given these facts, Samadi and Lenox Hill had a prohibited financial relationship under the Stark Law throughout the Covered Period.  Defendants therefore were not permitted to submit to Medicare reimbursement claims for the health services referred to them by Samadi.

Source: https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-123-million-settlement-lenox-hill-hospital-submitting

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