A former Wheeling Hospital VP has filed a whistleblower lawsuit alleging his employer routinely paid kickbacks to physicians in exchange for patient referrals.
Whistleblower Louis Longo claims the hospital was struggling financially until it started paying kickbacks to physicians in exchange for patient referrals. The complaint mentions two specialists who received substantial financial incentives from Wheeling in violation of both the Stark Law and the Anti-Kickback Statute.
Because the kickbacks Wheeling paid resulted in Medicare and Medicaid beneficiary referrals, the hospital submitted false claims for payment to the government programs. This allowed Longo to file a suit under the False Claims Act. If the complaint is successful, he could receive a multi-million-dollar reward.
Longo alleges that his former employer paid a gynecologist $1.3 million annually and a surgeon $770,000, although neither of their practices was making a profit. According to a companion complaint filed by the government, Wheeling also built a clinic for Adam Tune, an anesthesiologist, in the hospital’s property and paid him a $1.2 million annual salary.
A recent survey showed that an internal medicine doctor can generate 10 times her salary in revenue, and a cardiovascular surgeon can generate nine times his salary. These revenues translate into millions of dollars per year. This makes kickback schemes very tempting for uncompetitive hospitals like Wheeler, which received the lowest possible score from the government last year for the quality of service: one star.
For Alma College fraud scholar Tom Ealy, hospitals know how to play the system. “It’s almost a game of ‘We’re going to stretch the limits and see if we get caught, and if we get caught we won’t be prosecuted and we’ll pay a settlement,’” Ealey said.
One of the problems is that hospitals are buying more and more physician practices and putting doctors on their payrolls. In mid-2012, only a quarter of doctors were employed by hospitals. By early 2018, 44 percent of doctors were on a hospital’s payroll.
In the case of Wheeling, a hospital that lost $55 million over a period of seven years, the aggressive practice buyouts began in 2007 when a new CEO took over. Ronald Violi allegedly opted for paying lavish salaries to doctors who could generate the most revenue for the hospital. According to Longo’s lawsuit, Wheeler quickly became a ‘profit machine.’
Prosecutors claim at least 36 doctors received some form of illegal financial incentive from Wheeler. Allegedly, executives kept detailed records of how much revenue each doctor was generating in order to pay them accordingly.
In one internal memo, Wheeling’s CFO referred to a surgeon who had generated $11 million in revenue the previous year, describing him as, “a man we need to keep happy.”
In this type of scenario, only doctors and hospitals win; patients suffer, because they don’t get the best treatment, but the treatment that is more lucrative for providers, and taxpayers also suffer, because the money that should be used to keep Americans healthy goes to line the pockets of fraudsters instead.
According to the allegations against Wheeling, the hospital found some creative ways to disguise kickback payments. In the case of anesthesiologist Adam Tune, Wheeling paid $3,000 per day to a company controlled by Tune to lease clinic space.
Whistleblower Louis Longo was fired in 2015 after voicing his concerns about the hospital’s illegal contracts with doctors. Meanwhile, the hospital achieved record profits, totaling $90 million in five years under Violi’s ‘guidance.’
In spite of the ongoing federal investigation into Violi’s methods, the Catholic hospital’s board chairman, Monsignor Kevin Quirk, said in a statement that Wheeling “has benefited tremendously from [Violi’s] keen business acumen.” The former CEO is now retired.