The U.S. Attorney’s office is accusing Steward St. Elizabeth’s Medical Center of Boston of paying a physician almost $5 million in “improper” incentives to increase profits from cardiovascular surgeries.
Acting U.S. Attorney Joshua S. Levy’s office alleges the hospital chain, affiliated with Holy Family Hospital in Methuen and Haverhill, violated the Physician Self-Referral Law—known as the “Stark Law”—by submitting false claims and statements to Medicare. Prosecutors said in 2012, Steward recruited Dr. Arvind K. Agnihotri, a cardiac surgeon, to serve as the chief of cardiac surgery at St. Elizabeth’s, but paid “compensation that exceeded fair market value.” The hospital fired back, however, saying that officials are “disappointed and surprised” with the civil suit over “a single contract that Steward entered into with a single physician.”
“Notably, the lawsuit does not allege that Steward submitted claims for any medical procedures that were unnecessary, not performed or billed incorrectly. It does not allege that the physician’s employment contract influenced his clinical decision making in any. And it does not allege any harm to patient safety,” Steward said in a statement.
The U.S. Attorney said “The Stark Law protects patients and the Medicare program from physicians’ financial relationships leading to unnecessary overutilization of services or increased costs. The office alleges Agnihotri made referrals to St. Elizabeth’s in violation of the Stark Law and the hospital submitted more than 1,000 claims to Medicare “knowing the claims for those referred services were not eligible for payment.”
The government’s investigation was prompted by, what the U.S. Attorney’s office called, a whistleblower. Steward acknowledged the complaint originated “five years ago by a former employee seeking to collect money.” The company added that both the U.S. attorney and the Massachusetts attorney general “declined to proceed with” other allegations by the former worker.
In its response, Steward said, “The lawsuit is without merit and a waste of taxpayer money, and suffers from clear and obvious legal defects that Steward expects to address soon through a motion to dismiss.”