CHARLESTON, W.Va. -- A financially strapped West Virginia hospital has agreed to pay the federal government $50 million to resolve claims that it improperly issued payments and kickbacks to physicians under the direction of management, the U.S. Justice Department announced Wednesday.
The Justice Department announced the settlement involving Wheeling Hospital stemming from a whistleblower complaint filed in 2017 by Louis Longo, a former hospital executive vice president. Longo was allowed to share in the proceeds of the lawsuit and will receive $10 million, the department said in a statement.
Longo’s lawsuit was filed in 2017 and unsealed in December 2018, when the Justice Department intervened. He asserted the Catholic hospital’s physician compensation violated federal law by improperly paying millions in excessive compensation based on the volume or value of patient referrals.
Some physicians received compensation totaling more than $1 million a year under the system, according to the complaint.
“Improper financial arrangements between hospitals and physicians can influence the type and amount of health care that is provided,” said Jeffrey Bossert Clark, acting assistant attorney general of the Justice Department’s Civil Division. “The department is committed to taking action to eliminate improper inducements that can corrupt the integrity of physician decision-making.”
The government alleged the actions occurred from 2007 to 2020 under the direction of the hospital's prior management, R&V Associates Ltd., and Chief Executive Officer Ronald Violi, who retired in 2019.
“Medicare and Medicaid beneficiaries trust that their healthcare providers will make decisions based on sound medical judgment,” said U.S. Attorney Scott W. Brady of Pennsylvania's western district. “Our office will take decisive action against any medical providers which betray that trust and make medical decisions based on their own financial interests. Our seniors deserve nothing less.”
The 223-bed hospital is owned by the Roman Catholic Diocese of Wheeling-Charleston. It entered into a management services agreement last year with the West Virginia University Health System.
In July, Wheeling Hospital announced unspecified staff reductions, giving employees the choice whether to participate in a severance plan. At the time, the hospital had a medical staff of nearly 300.
CEO Douglass Harrison said in July that Wheeling Hospital suffered an $11 million loss in fiscal 2019 and had lost more than $18 million this fiscal year. Harrison said the hospital was continuing to look for a long-term strategic partner for its ultimate survival.
In a statement Wednesday, Harrison said the settlement was in the hospital's long-term best interest. The hospital made no admission of wrongdoing.
“Prolonging the lawsuit would have paralyzed the ability of the hospital to attract the best physicians and to make the necessary capital improvements to ensure that the highest quality health care continues to be provided in the Upper Ohio Valley,” Harrison said.
Another Wheeling hospital, Ohio Valley Medical Center, and sister facility East Ohio Regional Hospital in nearby Martins Ferry, Ohio, closed last year.