West Virginia hospital agrees to pay $50M to settle whistleblower case alleging Stark and Anti-kickback violations

WHEELING, WV, Sept. 9, 2020 – Wheeling Hospital has agreed to pay $50 million to the government to settle a whistleblower lawsuit filed by Phillips & Cohen LLP.

The “qui tam” lawsuit alleged the West Virginia hospital violated kickback and physician self-referral laws as part of a scheme to boost its revenues and gain “monopolistic power and dominating market share” in the Ohio Valley region.

The US Department of Justice joined the whistleblower’s lawsuit after investigating the allegations that the hospital violated the Anti-Kickback Statute, the Stark Law and the False Claims Act.

“This case is significant for the amount that a single hospital is paying to settle allegations that it violated the Stark Law, which was designed to prevent patient steering and physician self-referrals,” said Amy L. Easton, a whistleblower attorney and partner in Phillips & Cohen’s Washington, DC, office.

The Stark Law generally requires that the amount of compensation hospitals pay doctors is fair market value and excludes from consideration the volume and value of patient referrals from those doctors. The Anti-kickback Statute arose out of congressional concern that payoffs to those who can influence healthcare decisions would result in medically unnecessary and poor quality services.

“It is important that doctors recommend treatment plans based on what’s best for patients rather than what’s best for profits,” Easton said.

The government alleged the fraud scheme began in 2007 after Wheeling Hospital hired a new CEO, Ronald Violi, and his management company, R&V Associates, to engineer a financial turnaround.

One of the principal means by which they did so was by hiring a large number of physicians, primarily as employees, to capture for the hospital those physicians’ referrals and resulting revenues, thereby increasing Wheeling Hospital’s market share.

In executing that strategy, the lawsuits alleged that the hospital systematically entered into improper compensation arrangements with referring physicians.

Wheeling Hospital paid millions of dollars to doctors based on their referrals, including some who were paid annual salaries of more than $1 million, according to the whistleblower’s and government’s complaints. The hospital closely tracked the amount of revenue each participating doctor generated for the hospital by referring patients for additional medical tests and treatment.

“Improper payments can lead to unnecessary or poor medical treatment and the elimination of hospital competition to treat those patients,” said Jeffrey W. Dickstein, a partner and whistleblower attorney with Phillips & Cohen who is based in Miami, Florida. “Less competition in a local area leads to fewer options for patients.”

Wheeling Hospital serves patients in the West Virginia, Ohio and Pennsylvania region.

The qui tam lawsuit was brought by Louis Longo, a former executive vice president at Wheeling Hospital. Longo raised his concerns about the hospital’s conduct with the hospital’s CEO. He was later fired.

After Longo’s qui tam lawsuit was unsealed, the hospital sued him for claims that included not disclosing the fraud through internal hospital channels. The hospital quickly abandoned this lawsuit after it was required to legally substantiate its claims.

“Intimidation is a scare tactic often used against whistleblowers,” said Dickstein. “We are not going to tolerate baseless lawsuits against our clients.”

After the government intervened in the False Claims Act lawsuit, the hospital—under new management—took strong corrective measures and ultimately resolved the False Claims Act lawsuit.

DOJ Trial Attorney Rohith V. Srinivas and DOJ Senior Trial Counsel Laurie A. Oberembt, both of the Fraud Section of the Civil Division, litigated the case for the government.

“Ro Srinivas and Laurie Oberembt were strategic, relentless and very impressive,” said Easton. “The sheer size of the settlement they negotiated, which was limited by ‘ability to pay’ constraints, speaks volumes and demonstrates the department’s commitment to protecting patients from the risks posed by these improper business practices.”

Former Assistant US Attorney Colin Callahan of the Western District of Pennsylvania played a critical role in the government’s investigation and intervention decision. Assistant US Attorney Christopher J. Prezioso and former Assistant US Attorney Greg Kinskey of the Northern District of West Virginia represented the government in Wheeling, West Virginia.

David Jochnowitz, an associate at Phillips & Cohen, provided invaluable litigation assistance. Andrew M. Stone of Stone Law Group in Pittsburgh, PA, and Christina S. Terek of Spilman Thomas and Battle PLLC in Wheeling served as local counsel.

The False Claims Act allows private citizens to sue entities that are defrauding the government and recover funds on the government’s behalf. Under the law, whistleblowers are offered protection against job retaliation and rewards of 15 percent to 25 percent of the amount recovered as a result of their qui tam case, when the government joins it.

The case is captioned US ex rel. Louis Longo v. Wheeling Hospital, Inc. et al., No. 17-cv-1654 (W.D. Pa.).


About Phillips & Cohen LLP

Phillips & Cohen is the nation’s most successful law firm representing whistleblowers. The firm’s cases have helped recover more than $12.3 billion in civil settlements and criminal fines. Phillips & Cohen represents whistleblowers in qui tam lawsuits as well as whistleblower claims with the reward programs of the Securities Exchange Commission, the Commodity Futures Trading Commission and the Internal Revenue Service.

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