N.Y. center pays $18.8M to settle case about cardiology referrals

A New York medical center paid almost $19 million to settle a kickback case involving a cardiology practice. The charges alleged that the medical center improperly paid the practice for referrals and improperly submitted cost reports for cardiology fellows’ services.

The Department of Justice (DoJ) pursued the whistleblower case against Westchester Medical Center in Valhalla, which it claimed had a financial relationship with Cardiology Consultants of Westchester. The cardiology group originally had operated on the Valhalla campus, but in 2001 it entered into a management agreement with an affiliate of the center to establish a practice in Kingston.

According to the charges, the medical center advanced money to the cardiology group to develop the Kingston practice. In 2003, it terminated the management agreement; negotiated repayment of the outstanding advances at lower terms over an extended timeframe; and entered into a retroactive consulting agreement that was later amended.

The cardiology group received $190,000 between 2003 and 2005, a period during which the group “referred patients for hundreds of procedures at [Westchester Medical Center],” according to the DoJ. The medical center failed to provide evidence that the cardiology group performed the consulting services, it added.

The case also alleged that the medical center, which is a clinical affiliate of the New York Medical College, filed cost reports for cardiology fellows who provided services in the cardiology practice’s private offices. The medical center had written off unpaid invoices submitted to the cardiology practice as uncollectable in 2007. The DoJ claimed that some of the costs may have occurred in a nonhospital setting or may not have met regulatory requirements.

In a statement reported by Reuters, the medical center responded that "[a]lthough the Medical Center believes that its financial relationships with its clinical faculty are customary for academic medical centers of its size and complexity, we acknowledge that, with respect to a very small number of legacy relationships, we could not produce documentation sufficient to meet certain technical requirements of federal law.”

A U.S. district judge approved a settlement amount of $18.8 million on May 14, which the medical center accepted to resolve its liabilities. According to Reuters, Cardiology Consultants was not charged in the case.