King’s Daughters Medical Center settles with DOJ for nearly $41 Million

After three years of defending the Ashland, Kentucky, hospital against the government’s allegations that it had submitted Medicare and Kentucky Medicaid claims for medically unnecessary cardiology procedures and paid cardiologists kickbacks to perform more procedures at King’s Daughters Medical Center, the hospital negotiated a $40.9 million settlement — roughly double the amount of the alleged false claims.

“We decided we could not afford to continue draining valuable resources on government allegations related to old cases,” wrote Kristie Whitlatch, Ashland Hospital Corp’s new president and CEO on the hospital’s website. Ashland Hospital Corp is the business name for King’s Daughters Medical Center and Whitlatch had inherited the case when she came on board.

Calling the decision to settle “difficult,” Whitlatch also noted that “some people will interpret the settlement as an admission of guilt. It is not.”

According to the U.S. Department of Justice’s case against King’s Daughters Medical Center, between 2006 and 2011, the hospital allegedly billed Medicare and Kentucky Medicaid programs for unnecessary coronary stents and diagnostic catheterizations. To justify the procedures, physicians allegedly falsified medical records. In addition, the hospital was accused of rewarding referring cardiologists with higher than market-value salaries that amounted to kickbacks for referrals, a violation of the Stark law.

“The conduct alleged in this matter is unacceptable, victimizing both taxpayers and patients,” stated U.S. Attorney Kerry Harvey in the DOJ’s announcement of the settlement. “Treatment decisions motivated by financial gain undermine public confidence in our health care system and threaten vital federal programs upon which so many of our citizens rely.”

As part of the settlement, King’s Daughters Medical Center will enter into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services’ Office of Inspector General. The agreement dictates that the hospital must institute substantial internal compliance reforms and let a third-party review all of its claims to federal health care programs for the next five years.

The state of Kentucky will receive approximately $1,018,380 of the settlement amount, with the Federal government receiving the rest.