Mercy lawsuit payouts pile up to $63M

Five months into the year, Mercy Springfield Communities already has two lawsuit payouts on the books totaling $63 million.

Mercy Hospital Springfield and affiliate Mercy Clinic Springfield Communities agreed May 19 to pay $34 million to settle alleged health care fraud claims – its second such suit for violating that specific law. That’s on top of a suit in March when the area’s largest employer was ordered to pay $28.9 million after a jury found the organization and one of its doctors guilty of negligence.

In a video statement, Mercy Central Communities Regional President Jon Swope said because the expenses were planned, the most recent settlement would not result in layoffs or increased costs for patients. According to a news release, Mercy held back the necessary funds during the previous fiscal year for the planned expense; hospital officials have been in talks with the federal government for several months.

“This issue was about administrative mistakes in how we paid our doctors,” he said, in the video. “The laws that regulate how doctors are paid are extremely complex and the Justice Department has said we didn’t intentionally violate them.

“Even so, we made a mistake and we are committed to doing better going forward.”

Mercy officials declined further questions from Springfield Business Journal, referring only to the prepared video statement.

Strike two
This month’s $34 million settlement is the result of a whistleblower suit by former chairman of the Mercy Clinic Oncology Department Dr. Viran Roger Holden. In June 2015, he alleged Mercy Hospital and Mercy Clinic violated the Federal Civil False Claims Act by submitting false claims to Medicare. Under the law, citizens can file suit on behalf of the government for false claims and share in the recovery.

Holden also filed a civil suit against Mercy in 2015, claiming he was wrongfully terminated after he testified against the health system. The suit sought damages for loss of position, his termination and punitive damages. Among the claims in the case, Holden said Mercy violated the Federal Whistleblowers Protection Act.

According to Springfield Business Journal archives, Mercy terminated Holden on May 14, 2015, for a lack of professional judgment “in regards to relationships with coworkers and controlled substance prescriptions.” In the filing, Holden acknowledged one three-year affair with a registered nurse, but said he was fired for his testimony in a separate wrongful termination case and for seeking legal remedies in instances of inappropriate Medicare and Medicaid claims made by two Mercy oncologists.

This isn’t the first time Mercy has come up against the Federal Civil False Claims Act. A similar suit in 2015 by Dr. Jean Moore resulted in a $5.5 million settlement.

Both suits accused Mercy of illegally incentivizing doctors’ referrals for chemotherapy treatment service. The services were given to patients after being referred by oncologists whose compensation was based, in part, on the value of their referrals. Under federal law, such financial relationships between hospitals and clinics are restricted, according to a news release from the U.S. Justice Department.

According to the latest settlement agreement, between 2009 and 2014, Mercy violated the Ethics in Patient Referrals Act of 1989, known as the Stark Law, which prohibits physicians from referring patients for Medicare-covered services if the physician receives compensation from the referred organization. Subsequently, the suit claimed, Mercy Hospital submitted false claims to the government by certifying that the claims were in compliance with all laws.

“When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone,” said Chad Readler, acting assistant attorney general for the Justice Department’s civil division, in the release. “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

In compensation, Holden will receive $5.4 million, adding to the $1.5 million he collected from Mercy from the wrongful termination suit. Moore received $825,000. Both Holden and Moores’ suits were handled by Jenifer Placzek of Placzek Winget & Placzek LLC.

Adding up
The most recent suit adds to the $28.9 million a jury awarded in March, after it found the organization and one of its doctors guilty of negligence.

In the March 3 verdict found the affiliate of Mercy Springfield Communities guilty of not catching or quickly treating defendant Emilee Williams for Wilson’s disease, a disorder where copper accumulates in such vital organs as the brain and liver, according to court documents obtained by SBJ.

The court order comprised $21 million for future medical damages; $3.2 million for future noneconomic damages; $3.2 million for future economic damages, excluding future medical damages; $1 million for past noneconomic damages; and $511,000 for past economic damages, including past medical damages.

As a result of the negligence, Williams now has several complications from Wilson’s disease, including motor and speech impairment, tremors and the need to be fed through a percutaneous endoscopic gastrostomy tube that connects to a patient’s stomach, according to court documents.


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