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Wheeling Hospital Agrees to $50 Million Settlement with DOJ

File Photo – The Wheeling Hospital campus is pictured along Medical Park Drive.

WHEELING — A settlement has been reached between Wheeling Hospital and the U.S. Department of Justice that will require the hospital to pay $50 million to resolve claims that it violated federal “anti-kickback” rules, both sides announced Wednesday.

The hospital agreed to the settlement following accusations it violated the federal False Claims Act by allegedly paying millions in kickbacks to doctors since 2007 and incentivizing payments to doctors based on how much patient business they referred back to the hospital.

The Physician Self-Referral Law, better known as the Stark Law, prohibits a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with a hospital unless otherwise permitted.

“Improper financial arrangements between hospitals and physicians can influence the type and amount of health care that is provided,” said Acting Assistant Attorney General Jeffrey Bossert Clark, who is part of the DOJ’s civil division. “The department is committed to taking action to eliminate improper inducements that can corrupt the integrity of physician decision-making.”

Federal investigators accused the hospital, including its former management consultant, R&V Associates, Ltd., and former CEO Ronald Violi, of violating the Stark Law and Anti-Kickback Statute since 2007. R&V took over management of Wheeling Hospital in 2006 and immediately turned the hospital’s perennial financial losses into nearly $90 million profits in the first five years.

Louis Longo, a former executive vice president at Wheeling Hospital, brought a whistleblower lawsuit in December 2017 after he was fired for reportedly raising concerns about the medical facility’s financial conduct to Violi. The lawsuit was originally filed under seal through Phillips & Cohen LLP, but the Department of Justice intervened in the lawsuit against the hospital in March 2019, accusing it of violating the Stark Law and the Anti-Kickback statute.

The hospital sued Longo, but later dropped the lawsuit. DOJ officials said Longo will receive $10 million of the settlement.

“Intimidation is a scare tactic often used against whistleblowers,” said Jeffrey Dickstein, a partner and whistleblower attorney with Phillips & Cohen in Miami. “We are not going to tolerate baseless lawsuits against our clients.”

Amy Easton, a whistleblower attorney and partner with Phillips & Cohen’s office in Washington, D.C., called the case “significant” for the amount the hospital will have to pay as part of the settlement. Easton said it’s a warning for hospitals and doctors to follow Stark Law.

“It is important that doctors recommend treatment plans based on what’s best for patients rather than what’s best for profits,” Easton said.

Violi retired as hospital CEO in May 2019 shortly after the federal government intervened in the whistleblower lawsuit. A message left for Violi at R&V Associates in Pittsburgh was not immediately returned Wednesday.

WVU Medicine took over management operations of the hospital in June 2019 and named Douglass Harrison as its new CEO. Harrison said Wednesday he hopes the settlement will allow the hospital to move forward.

“The settlement was in the best interest of the long-term viability of the hospital and the community,” Harrison said. “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.”

The settlement comes seven weeks after the hospital announced it would begin reducing its staff and planned other cost-cutting measures after the medical center lost nearly $30 million over the past two years. Hospital officials announced July 21 they would offer buyouts and implement salary reductions to administrative staff and physicians, although no announcement has been made on how many workers have agreed to the voluntary severance.

Harrison said at the time the cuts were needed because of the COVID-19 pandemic, which has had a $35 million impact on the hospital, and the looming settlement with the federal government.

Harrison said last year’s change in leadership helped to prevent the hospital from undergoing a five-year monitoring period normally required by the DOJ in such cases. The action against the hospital also was dismissed with prejudice, without an admission of wrongdoing, Harrison said.

“The settlement will not impede the hospital’s focus on patient care or its commitment to compliance, ethical conduct and integrity,” Harrison said.

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