Ky. hospital paying $41M to state, feds to settle False Claims Act allegations

By Bryan Cohen | May 29, 2014

FRANKFORT, Ky. (Legal Newsline) - Kentucky Attorney General Jack Conway announced a $40.9 million federal and state settlement on Wednesday with an Ashland-based hospital that allegedly falsely billed federal health care programs for unneeded procedures.

King's Daughters Medical Center (KDMC) allegedly made millions of dollars between 2006 and 2011 by billing for numerous unnecessary coronary stents and diagnostic catheterizations. The physicians allegedly falsified medical records to justify the procedures.

The allegedly fraudulent reimbursements represented violations of the False Claims Act, because federal health care programs can only reimburse providers for procedures that are deemed medically necessary.

KDMC also allegedly violated the Stark Law by engaging in improper financial relationships with some physicians. The Stark Law is meant to limit the influence of money on physicians' medical decisions.

"We take very seriously our obligation to ensure the safety of patients in Kentucky and to hold accountable those who put profits ahead of patient care," Conway said. "I appreciate the hard work of my Medicaid Fraud Unit and all of the agencies involved in this case, and I am pleased that we are able to recover this money on behalf of Kentucky taxpayers and a vital state program."

Kentucky will receive $1,018,380 from the settlement, which represents the state's share of the recovered Medicaid funds. The Medicaid program is jointly funded by the state and federal governments.

Conway's Medicaid Fraud and Abuse Control Unit worked on this matter with the FBI, the Department of Health and Human Services Office of Inspector General, the U.S. Attorney's Office for the Eastern District of Kentucky and the Commercial Litigation Branch of the Department of Justice's Civil Division.

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