Cardiologists Sue Citizens Medical Center Over Illegal Kickback Scheme

Citizens Medical Center, a Texas-based hospital, has been sued by three physicians who claim that the medical center paid illegal kickbacks to multiple staff physicians. Their allegations are now being investigated by the federal Office of Inspector General.

The lawsuit was filed by Victoria cardiologists Drs. Dakshesh “Kumar” Parikh, Harish Chandna and Ajay Gaalla. The lawsuit, which was originally filed on behalf of the United States in 2010, was sealed until February 2013.  Alleged violations contained in the documentation that supported the qui tam lawsuit date all the way back to 2007.

The qui tam lawsuit contains a laundry list of allegations, including accusations that Citizens Medical Center paid illegal kickbacks to several hospital physicians in exchange for their patient referrals. Multiple hospital staff members are named in the lawsuit, including emergency room doctors and gastroenterologists.

The lawsuit goes on to claim that the hospital submitted false and fraudulent reimbursement claims to Medicare. If found to be true, these actions would be a direct violation of the False Claims Act. The Inspector General’s Office sent a subpoena to the hospital in February, however, Citizens Medical Center officials say they were unaware of the lawsuit until last week.

Lawsuit Details

According to the allegations contained in the lawsuit, Drs. Parikh, Chandna and Gaalla say Citizens Medical paid illegal cash bonuses to various Emergency Room physicians in exchange for patient referrals to the hospital’s chest pain center.

Once referred to the pain center, the hospital allegedly performed medically unnecessary nuclear stress tests on the patients. The unwarranted stress tests were also performed on multiple patients of Drs. Parikh, Chandna and Gaalla without their knowledge, order or consent.

Illegal Kickback Payments

Drs. Parikh, Chandna and Gaalla also accuse Citizens Medical of paying thousands of dollars in illegal kickbacks to ER doctors. According to official documents, between September 16, 2008 and March 18, 2010, Citizens Medical paid cash bonuses to these doctors totaling $647,049.25. An additional $190,665 of illegal kickbacks were paid out between March 18, 2010 and July 22, 2010.

According to each of the three cardiologists, Citizens Medical Hospital administrators deliberately took away many of their active patients and transferred their care to the hospital. They say this was done in an effort to increase the hospital’s revenue through conducting the medically unnecessary stress tests.

The lawsuit also contains allegations that Citizens Medical violated both the Anti-Kickback Act and the Stark Act. The Anti-Kickback Act prohibits anyone from offering, paying, soliciting or receiving anything of value to induce or reward the referral of patients or generate Federal health care program business. In contrast, the Stark Act prohibits physicians from referring a Medicare patient to an entity with which the referring physician has a financial relationship. The Stark Act also prohibits a provider from submitting claims to Medicare for those services resulting from a prohibited referral.

Drs. Parikh, Chandna and Gaalla each allege that Citizens Medical violated the Anti-Kickback Act by providing office space to their cardiologists at a highly discounted rate. They also claim that multiple gastroenterologists who participated in the hospital’s colonoscopy screening program received illegal kickbacks in the form of cash for referrals to Citizens Medical.

According to the lawsuit, Dr. Yusuke Yahagi, a Citizens cardiologist, and David Brown, hospital chief executive officer, both sent letters to Drs. Parikh, Chandna and Gaalla asking why they were not referring patients from their private practices to Citizens’ Medical Hospital.

According to Drs. Parikh, Chandna and Gaalla, Dr. Yahagi was known for a high patient mortality rate and, therefore, they were not comfortable referring patients to him for treatment.

In February 2010, Citizens Medical passed a new resolution granting their own cardiologists the exclusive right to practice at the hospital. This action essentially barred Drs. Parikh, Chandna and Gaalla from being able to practice at Citizens Medical.