Lenox Hill Hospital Settles Alleged False Claims Act Violations for $12.3 Million

by Andrew Murray | November 15th, 2019

The Department of Justice announced the settlement on November 8, 2019. The hospital allegedly submitted fraudulent claims to Medicare for hospital services and urology procedures. The Press Release states:

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United States filed and settled a civil fraud lawsuit against LENOX HILL HOSPITAL (“Lenox Hill”) and its corporate parent NORTHWELL HEALTH, INC. (“Northwell”) (together, “Defendants”).  The Government’s Complaint-in-Intervention (the “Complaint”) alleges that Defendants violated the False Claims Act by fraudulently billing Medicare for healthcare services that did not comply with Medicare law.  The Complaint specifically alleges that in conjunction with Defendants’ employment of Lenox Hill’s former chair of the Department of Urology, David B. Samadi (“Samadi”), Defendants submitted claims for: (1) endoscopic procedures that were performed, at least in part, by insufficiently supervised medical residents; (2) robotic surgeries for which, at some point during the surgery, Samadi left the patient improperly unattended in order to supervise a different surgery; (3) medically unnecessary hospital services; and (4) designated health services referred to Lenox Hill by Samadi when his compensation arrangement violated the federal Stark Law. 

Under the settlement, approved by U.S. District Judge Denise Cote, Defendants agreed to pay $12.3 million to resolve the allegations in the Complaint.  As part of the settlement, Defendants also admitted, acknowledged, and accepted responsibility for conduct alleged in the Complaint, including that “Defendants’ practices resulted in the submission of several million dollars of inappropriate claims to Medicare.”

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As alleged in the Complaint, from July 2013 through June 2018 (the “Covered Period”), Samadi oversaw Lenox Hill’s Department of Urology, including the training of its medical residents.  During Samadi’s tenure, Defendants encouraged and facilitated surgical practices that violated Medicare’s rules and regulations that govern a teaching physician’s presence and availability during both endoscopy and high-risk, complex surgery.  Although Medicare allows teaching institutions to utilize medical residents in the provision of surgical care, the law requires that a board certified senior surgeon provide adequate supervision.  Throughout the Covered Period, in order to maximize the revenues that Samadi generated for Lenox Hill, Defendants allowed Samadi to engage in an overlapping surgical practice wherein he was insufficiently available to provide the supervisory oversight required by Medicare.  Specifically, Defendants would schedule Samadi to perform two separate surgeries, one endoscopic and one robotic, at the exact same time.  During the course of the two surgeries, a medical resident would remain with the patient undergoing an endoscopic procedure or operation.  Meanwhile, Samadi himself would travel back and forth between the endoscopic room, and an adjacent operating room in which Samadi conducted high-risk, complex, surgeries utilizing a surgical robot.  This practice not only violated Medicare law, it also violated Northwell’s own resident supervision policy – and it resulted in Defendants’ submission of false claims.  Moreover, Samadi’s patients were never informed that their surgeries were scheduled to overlap with another of Samadi’s scheduled surgeries.

Samadi’s operating room practices also resulted in the submission of medically unnecessary claims.  In a further effort to maximize Samadi’s availability to perform revenue-generating surgeries, Defendants allowed Samadi to perform minor diagnostic procedures in a Lenox Hill operating room.  Operating room services, such as the services provided by operating room nurses and/or anesthesiologists, were medically unnecessary in the case of these minor procedures.  Nonetheless, in conjunction with the minor diagnostic procedures that Samadi’s patients underwent in a Lenox Hill operating room, Defendants submitted claims to Medicare for the medically unnecessary operating room services provided.  These unnecessary services were also ineligible for Medicare reimbursement.

Lastly, Defendants submitted claims for health services that violated the Stark Law.  The Stark Law is a federal law that prohibits a hospital from receiving Medicare reimbursement for services referred by a physician with whom the hospital has a prohibited financial relationship.  The law is intended to prevent conflicts of interest in physician referrals.  Throughout the Covered Period, Defendants paid Samadi a guaranteed salary of over two million dollars each year, as well as an annual incentive bonus of an additional two to five million dollars each year.  This compensation grossly exceeded fair market value because it factored in the value of Samadi’s referrals to Lenox Hill.  In addition, in calculating Samadi’s incentive bonus, Lenox Hill included revenues from services not personally performed by Samadi.  This inclusion of non-personally performed services in a physician’s incentive compensation also violated the Stark Law.  Given these facts, Samadi and Lenox Hill had a prohibited financial relationship under the Stark Law throughout the Covered Period.  Defendants therefore were not permitted to submit to Medicare reimbursement claims for the health services referred to them by Samadi.

As part of the settlement, Defendants admitted conduct alleged in the Complaint, including that:

At the time of Samadi’s recruitment and hiring, Defendants prepared internal documents that contained analyses of Samadi’s future referrals to Lenox Hill for designated health services.  These documents projected revenues of over four million dollars a year attributable to Samadi’s future referrals.  These documents also projected that, without taking into account these revenues, Lenox Hill would operate Samadi’s medical practice at a loss of over one million dollars each year.
Throughout the Covered Period, taking into account only the value of Samadi’s own collections, Lenox Hill operated Samadi’s medical practice at a loss of over one million dollars each year.
From October 2016 through at least July 1, 2017, Northwell had an internal policy stating that “[w]hen a Teaching Physician is not present during non-Critical non-Key Portions of the procedure and is participating in another surgical procedure, he/she must arrange for another qualified surgeon to immediately assist the resident in the other case should the need arise.”  The policy further stated, under the section titled “Teaching Physician Requirements for Endoscopy,” that “[t]he Teaching Physician must be present in the room for the entire viewing from the time the scope is inserted to the time the scope is removed.”
During much of the Covered Period, Samadi performed surgical operations and procedures at Lenox Hill in the following manner:Samadi performed procedures in two operating rooms – OR 21 and OR 25, and sequenced the order of procedures such that portions of procedures performed in OR 21 overlapped with procedures performed in OR 25, and vice versa. 

During the portions of OR 21 and OR 25 procedures that overlapped, Samadi generally performed complex, robotic surgical procedures in OR 25, and residents assigned to be supervised by Samadi performed endoscopic operations and procedures in OR 21.

Samadi rarely designated another attending urologist to assist in OR 21 for the portions of the procedure from which Samadi himself was absent because of his participation in another surgical procedure occurring in OR 25.

In instances when Samadi stepped away from a procedure in OR 25 to supervise a procedure in OR 21, Samadi would freeze or pause the robotic equipment in OR 25 and leave the patient under the care of the anesthesiologist, operating room staff, and, in some instances, a urology resident.  No other attending urologist was present in OR 25 for the portion of time that Samadi was absent, even though the surgery had not yet concluded.  Samadi also did not inform any other attending urologist of the specific times during a surgery when he was absent from OR 25.
It was not Samadi’s personal practice to inform his patients when their surgeries were scheduled to overlap with another of Samadi’s scheduled surgeries.

Samadi performed cystograms and cystoscopies on patients in OR 21 in certain instances when it was not medically necessary to perform these procedures in an operating room setting.  Lenox Hill submitted to Medicare claims for payment associated with the services rendered by operating room staff in conjunction with these procedures.
Defendants’ practices resulted in the submission of several million dollars of inappropriate claims to Medicare.

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The case appears to have begun as a government investigation, and not as a whistleblower’s qui tam complaint.

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