Pathology And The Law | The Pathology Blawg

Carolinas Pathology Group wins appeal in case filed by former pathologist employee

May 22, 2013 By A Leave a Comment

Dr. Vittal Shenoy (Carolina Urology Partners)

Dr. Vittal Shenoy, a pathologist formerly employed by Carolinas Pathology Group (CPG) and now working for Carolina Urology Partners, filed a lawsuit against CPG and Carolinas Healthcare System (CHS) alleging his First Amendment rights were retaliated against by both parties; tortious interference of his employment contract with CPG by CHS; and a False Claims Act retaliation claim against CPG. A district court dismissed both CPG and CHS from the case. Dr. Vittal appealed; the appellate court agreed with the district court and upheld the decision to dismiss both parties from the case just last week.

Quite a bit of background is necessary.

Dr. Shenoy worked at a hospital in Charlotte, North Carolina that was purchased by CHS; his partner worked at another Charlotte hospital that was also bought out by CHS.

CPG covered two different CHS-owned hospitals in Charlotte. In 1995, CHS decided to consolidate its pathology contract and invited Shenoy’s group and CPG to submit bids.

Before CHS had even awarded the contract, Shenoy filed a corporate compliance complaint against CPG, alleging it engaged in “improper billing practices”. CPG was eventually awarded the contract despite the complaint, and hired Shenoy’s partner; Shenoy was, not surprisingly, not offered a job.

The director of the hospital where Shenoy worked spoke with CPG on Shenoy’s behalf, and CPG eventually offered him a job. He remained at the same hospital and became lab director.

About seven years later, while chairing a Quality Improvement Committee meeting at the hospital, Shenoy apparently took heated exception to the manner in which the hospital administration was running the hospital, which, in Shenoy’s opinion, led to too many sentinel events, and that too much blame was being placed on physicians for the problems.

The manner in which Shenoy expressed his displeasure was deemed unprofessional and unacceptable by hospital administrators, some of whom were physically present at the meeting.

[Read more...]

Filed Under: Legal Cases, Pathology and the Law, Pathology News Tagged With: Carolinas Pathology Group

Dermatopathologists sue Morgan Stanley and ING for pay-to-play scheme

May 21, 2013 By A Leave a Comment

Skin Pathology Associates (SPA), a five dermatopathologist shop based in Birmingham, Alabama, has filed a class action suit against Morgan Stanley (MS) and ING for engaging in a pay-to-play scheme with its retirement money.

Some brief background is necessary here.

MS has what it calls an Alliance Partner program (APP), which consists of a group of companies that provide investment/record keeping services. According to the complaint, some but not all of the APP members pay MS additional fees based “solely on the amount of plan assets invested with the Alliance Partner”. So, if MS can steer retirement money to one of the APP members who does pay extra for the business, MS makes more money.

SPA hired MS to broker its retirement fund and to find an investment/record keeping platform provider. SPA alleges MS failed to conduct a “wide-ranging search” and instead, merely gave the work to ING, which happens to be one of the APP members that does pay additional fees to MS, according to the complaint.

The plaintiffs state the fact that MS does no additional work makes this a pay-to-play scheme and that MS is operating under a conflict of interest, whereby it has an incentive to steer as much business as possible to those members of its APP that will pay extra.

The complaint states ING also directly benefits from the conflict of interest inherent in this arrangement.

I sent an email to SPA looking for comment, but I did not hear back before publishing.

The full complaint is here.

Filed Under: Legal Cases, Pathology and the Law, Pathology News Tagged With: Skin Pathology Associates

Creighton University pathologist Dr. Roger Brumback and wife murdered

May 20, 2013 By A 2 Comments

Dr. Roger Brumback

Dr. Roger Brumback, former chairman of the Department of Pathology at Creighton University in Nebraska, was found murdered in his home along with his wife, Mary, on May 14, 2013.

Dr. Brumback had just announced his retirement, and he and his wife planned to move to West Virginia next month. Their bodies were found by a piano mover.

What makes this case even more strange is this is not the first time murder has touched the Creighton Department of Pathology. In March 2008, the 11 year old son of pathologist Dr. William Hunter was murdered, along with the family’s housekeeper. Police are currently investigating whether the cases are somehow connected.

Dr. Brumback seems like he was a very interesting man.

While in med school at Penn State, he engaged in chromosomal research of owl monkeys, and actually discovered a unique species. The species, Aotus brumbacki, was named after him.

He originally pursued training in both pediatrics and neurology, and became board certified in both, before he went into pathology.

At the time of his death, Dr. Brumback was Editor-in-Chief of the Journal of Child Neurology and the Journal of Evidence-Based Complementary & Alternative Medicine.

His wife earned her law degree at Penn State and practiced family law. They had three children together.

No arrests have been made in the case yet, and police have not released many details.

My thoughts go out to their family, friends and colleagues.

Filed Under: Pathology and the Law, Pathology News Tagged With: Roger Brumback

Pathology Blawg News Roundup for May 16, 2013

May 16, 2013 By A Leave a Comment

Business

-LabCorp announced that ViroMed Laboratories, a Minnetonka, Minnesota-based subsidiary, will be laying off 79 employees and shutting down a laboratory, beginning July 1, 2013. This represents 76% of the employees at the facility. Interestingly, there is no mention of this news in the “News and Events” page of ViroMed’s website.

-Dignity Health, a California-based hospital system that sold its clinical laboratory outreach services in parts of Nevada and California to Quest Diagnostics, announced it has notified over 500 employees they could be laid off, effective June 24. A spokesperson for Dignity said the number who will actually be laid off will probably be closer to 250. Dignity is working within its system and with Quest to find new jobs for the fired employees.

-Regulators have cleared the way for Utah’s largest medical malpractice carrier, Utah Medical Insurance Association (UMIA), to be purchased by Minnesota-based Midwest Medical Insurance Company (MMIC). The deal, which was apparently for approximately $142 million, now goes to policyholders, who are expected to approve the acquisition. Closing is anticipated to be in June 2013. Readers will recall The Doctors Company announced it was acquiring UMIA in November 2012, but that deal fell through in February 2013.

Health Care Fraud

-On May 14, 2013, Attorney General Eric Holder and Department of Health and Human Services Secretary Kathleen Sebelius announced the arrest of 89 people, including doctors and nurses, in an eight city takedown involving an alleged $223 million in fraudulent Medicare billings. AG Holder also stated he fears the DOJ’s ability to combat health care fraud could be compromised by the $1.6 billion cut (just for fiscal year 2013) to the Justice Department as a result of budget sequestration. Given the fact the Treasury receives $8 for every $1 the government spends on health care fraud investigations, I believe it would be foolish for legislators to not give the DOJ the flexibility to move funds around to continue to fund its health care fraud mission.

Bad News for Mississippi Pathologists

-Blue Cross/Blue Shield (BCBS) of Mississippi has announced that effective yesterday, it is reducing reimbursement up to 25% for pathology and radiology procedures. It is not clear based on the scarce information I have whether the reductions are for all pathology services or targeted ones. Dr. Thomas Fenter, Chief Medical Officer of BSBS of MS, says the reduction is in response to Obamacare. If that is true, it would be interesting to find out why this reimbursement cut was solely for radiology and pathology and not all medical specialties. The MS State Medical Society has apparently tried multiple times to contact BCBS, but received no response, and has petitioned the state Insurance Commissioner to intervene. (Hat tip to the College of American Pathologists’ Twitter feed-@Pathologists)

Filed Under: Business News, CAP, Clinical Laboratory Associations, LabCorp, Pathology and the Law, Pathology Malpractice, Pathology News, Pathology Vendors, Quest Diagnostics, The Doctors Company Tagged With: News Roundup

Thermo Fisher failed to disclose factory it sold was used by drug cartel, lawsuit alleges

May 15, 2013 By A Leave a Comment

Opengate Capital Group, a private buyout firm, filed a lawsuit in Los Angeles District Court on May 10, 2013, alleging Thermo Fisher Scientific, a leading producer of laboratory instruments, equipment and software, failed to disclose that the violent Gulf drug cartel was actively using a Mexican manufacturing facility Thermo sold to Opengate.

The factory, located in Reynosa, Mexico, was acquired by Opengate when it bought the Laboratory Workstations Business from Thermo via public auction in October 2012.

According to Opengate’s press release on the purchase:

Lab Workstations generates $175 million annually in revenue and its products include wood, metal and adaptable systems laboratory furniture, fume hoods and Epoxyn tops marketed and sold under three established brand names; Hamilton, Advanced Laboratory Concepts (ALC) and Collegedale.

Opengate’s complaint states the Reynosa facility is the “largest, most profitable facility for the Lab Workstation Business” and generates approximately 40-50% of the business’ revenue.

It also states Thermo was “desperate” to get rid of this part of its empire and at all times “was intent on ensuring that Plaintiffs would not discover certain material information” including “the dangerous and concerning threats existent at the Reynosa facility and the violent attacks that were transpiring in the region…”

The complaint goes on to outline how, since October 2011 (a full year prior to the sale), senior members of the Gulf cartel had “infiltrated” the facility on a daily basis, sometimes parking their cars and cargo trucks with unknown contents in the parking lot. Cartel members were also said to have brandished weapons at employees in order to gain access to the parking lot.

Quest Diagnostics fined for refusing to consider applicants with a criminal record

May 14, 2013 By A Leave a Comment

Quest Diagnostics will pay a $70,000 fine to the state of New York for participating in illegal hiring practices. In addition to the fine, Quest will take steps to prevent future departures from the law with respect to its hiring practices.

Obviously this is not the biggest legal development in the world of laboratory medicine, but it is a legal development nonetheless.

At issue is that New York:

[s]tate law requires that employers consider a number of mitigating factors in making hiring decisions based on criminal history, including the nature and gravity of an applicant’s criminal conviction and its bearing, if any, on any specific responsibilities of the job sought, the time that elapsed since the conviction, the age of the applicant at the time when the offense was committed and evidence of rehabilitation.

Apparently Quest was not even considering applicants with criminal records, at least in New York state.

The press release goes on to say:

The investigation also revealed that one of Quest’s subsidiary companies, ExamOne Worldwide Inc., contracted with insurance companies and violated New York law by imposing a blanket ban on hiring job applicants who had a criminal conviction within the prior seven years.

The New York Attorney General’s office learned of this issue when it received a complaint from someone (presumably with a criminal record) who applied to work at Quest.

I contacted Quest for comment and received this from Wendy Bost, Director of Media Relations:

Quest Diagnostics is committed to complying with the laws and regulations governing our business, including state and federal employment law.

We have fully cooperated with the Attorney General’s investigation and reached a resolution aimed at providing the Attorney General with objective evidence of our commitment to abide by New York state employment law regarding individuals with criminal record histories.

Our ExamOne paramedical examiners have direct patient access, traveling to the homes and businesses of applicants to collect specimens and other biometric information.

As always, we remain firmly focused on putting patients first and serving their needs.

Filed Under: Pathology and the Law, Pathology News, Pathology Vendors, Quest Diagnostics Tagged With: Quest Diagnostics

Louisiana appeals court upholds $964,000 award against pathologist

May 10, 2013 By A 3 Comments

Back in November 2012, I wrote a quick post about a medical malpractice lawsuit filed by a woman who had an unnecessary mastectomy because of an erroneous breast biopsy diagnosis. The plaintiff, Latoya Monroe, sued pathologist Dr. Charles Binford, Leonard J. Chabert Medical Center and the state of Louisiana and was awarded $964,487.

After the verdict, the attorney representing Dr. Binford (who apparently died in 2008) and the state felt the award was too high and stated her intent to appeal. The appeal has now been heard and the appeals court found in favor of Ms. Monroe.

First, some background from my earlier post:

Dr. Charles Binford, a pathologist at Leonard J. Chabert Medical Center in Houma, LA, assessed a core breast biopsy in 2006 and diagnosed invasive ductal carcinoma; the patient subsequently underwent a mastectomy. No cancer was found in the mastectomy specimen. A review of the biopsies by an outside pathologist found only sclerosing adenosis.

Specifically, the defendants took issue with the trial judge’s award of $475,000 for “general damages”, and that was the sole focus of the appeal.

From the appellate decision, general damages:

…are intended to compensate an injured plaintiff for mental or physical pain and suffering, inconvenience, loss of gratification or intellectual or physical enjoyment, or other losses of lifestyle that cannot be measured definitely in terms of money.

Ms. Monroe was pregnant at the time the diagnosis was made, and she testified the diagnosis “left her an emotional wreck” and that she was concerned for the health of her unborn child as well as her own. In addition, she thought she would require post-surgical chemotherapy and radiation.

After it was determined her biopsies demonstrated sclerosing adenosis and not invasive cancer and that her mastectomy had been unnecessary, she felt “angry and emotional”.

James Slattery, founder of Millennium Laboratories, out as CEO

May 7, 2013 By A Leave a Comment

Brock Hardaway

James Slattery, founder of Millennium Laboratories (ML), is being replaced as the company’s CEO by W. Brock Hardaway. Mr. Slattery will become chairman of ML’s Board of Directors.

Immediately prior to being named ML’s new CEO, Mr. Hardaway was the EVP of Operations of Kindred Healthcare, a company that runs nursing homes, rehabilitation centers and hospitals.

Mr. Hardaway is taking on this job at a somewhat challenging time for ML from a legal standpoint.

James Slattery

Readers will recall ML is dealing with a civil lawsuit filed by Edward Zicari, a former employee, who claims, among other things, ML bribed doctors to perform unnecessary testing and that its general counsel, Martin Price, gave a public presentation after Mr. Zicari was dismissed from ML that:

…contained imagery intended to shock and intimidate, including imagery of Zicari’s name on the toe tag of a body bag, after gunshot sounds were played for the audience.

Millennium denies all of the allegations in Mr. Zicari’s suit, and provided the Blawg with its answer to Mr. Zicari.

Mr. Zicari’s case is moving forward, with the most recent substantive event being the deposition of Lori Martin, Mr. Zicari’s girlfriend, on March 7, 2013. Ms. Martin used to be a sales representative for ML. According to the court reporter’s certification, Ms. Martin was deposed by Mr. Christopher Odell, ML’s attorney, for four hours, ten minutes.

In addition, ML is currently the subject of a Massachusetts federal grand jury investigation into criminal allegations it committed health care fraud and intimidated its former employees. The latter allegation includes the aforementioned presentation by Mr. Price.

As I said in my post, grand jury investigations operate in secrecy, so I am not sure where the investigation stands at this point.

Filed Under: Legal Cases, Millennium Laboratories, Pathology and the Law, Pathology News, Pathology Vendors Tagged With: Millennium Laboratories

Two Biodiagnostic Laboratory Services sales reps plead guilty to bribery conspiracy

May 3, 2013 By A 3 Comments

US Attorney Paul Fishman

Just yesterday it was announced Peter Breihof and William Dailey, two former sales representatives for Biodiagnostic Laboratory Services (BLS) in Parsippany, NJ, pled guilty to conspiring to bribe physicians to send lab work to BLS, according to US Attorney Paul Fishman.

Readers will recall I wrote about BLS a few weeks ago when the FBI announced it had arrested David Nicoll, part owner and president of BLS, his brother and his cousin for defrauding Medicare and several private insurers of tens of millions of dollars through a physician bribery and kickback scheme.

The FBI also arrested Dr. Frank Santangelo, a local internist, for allegedly accepting $700,000 in kickbacks from BLS in exchange for referring $4.2 million of lab work.

The FBI alleges the scheme started in 2006 and went through 2012. During that time, BLS is reported to have generated over $200 million in revenue, $33 million of which went to Mr. Nicoll, now 39.

Please see the earlier post for more details of the alleged bribery and kickback scheme and how Mr. Nicoll spent some of his money.

In addition to ”using phony lease and service agreements to bribe physicians to send their patients’ blood samples to BLS”, Breihof and Dailey admitted they paid referring physicians on a per test basis, so as to incentivize physicians to order a larger number of tests than they normally would have, according to the US Attorney’s office.

[Read more...]

Filed Under: Healthcare Fraud, Kickbacks, Medicare Fraud, Pathology and the Law, Pathology News Tagged With: Kickbacks

Owner of Wilkesboro Clinical Lab pleads guilty to health care fraud, tax evasion, Stark violation

April 29, 2013 By A 3 Comments

Louis Francis Curte, the former owner of Wilkesboro Clinical Laboratory (WCL) in North Carolina, has pled guilty to four counts of health care fraud and one count of filing a false tax return. Mr. Curte also settled separate Stark Law violation allegations with the US Attorney’s Office.

Mr. Curte arranged with another laboratory to culture microbiology specimens, and if the cultures were positive, the lab would subsequently perform identification and antibiotic sensitivity testing. Mr. Curte apparently billed Medicare for identification and sensitivity testing that was never performed and would bill for the additional tests even if the culture was negative. The value of these fraudulent billings is between $10,000-30,000.

Additionally, Mr. Curte had a business arrangement with a physician identified only as Dr. T.M., who owned a medical billing company. This billing company provided the billing services for WCL and was compensated on a “per claim” basis. Dr. T.M. also reportedly sent blood and tissue specimens to WCL for analysis.

The Stark Law states a medical provider may not bill Medicare or Medicaid for services referred by a physician with a financial relationship with the medical provider. A compensation arrangement ”…based on the volume of the physician’s referrals or the revenue realized through those referrals” is also prohibited.

Mr. Curte apparently recognized the relationship was improper, as the FBI states he submitted false tax records in order to hide the relationship with Dr. T.M. between 2007-2010. In these false tax statements, Mr. Curte understated his gross income, thereby lowering his tax burden. This loss of federal tax revenue is estimated somewhere between $30,000-50,000.

Mr. Curte settled the Stark Law violation for $300,000, which includes reimbursement for all improper Medicare payments and civil penalties.

He also agreed to full restitution to Medicare for the improper billings and the IRS for unpaid taxes and faces:

a maximum term of 10 years in prison and a $250,000 fine for the health care fraud charges and a maximum term of three years in prison and a $250,000 fine for the tax fraud charge.

A sentencing hearing has not yet been set.

Commentary

I am curious as to why some health care providers can perpetrate tens and even hundreds of millions of dollars in fraud before they are caught and Mr. Curte’s activities were identified after only $100,000 or so. What was so different about his case?

And I am again left to wonder why some people are willing to risk going to jail for such a relatively minuscule amount of money.

On a final note, Mr. Curte sold WCL to LabCorp in mid 2011 for an undisclosed sum.

Filed Under: Healthcare Fraud, Medicare Fraud, Pathology and the Law, Pathology News Tagged With: health care fraud

Carolinas Pathology Group wins appeal in case filed by former pathologist employee

Dermatopathologists sue Morgan Stanley and ING for pay-to-play scheme

Creighton University pathologist Dr. Roger Brumback and wife murdered