On May 28, the U.S. Department of Justice (DOJ) announced that Ashland Hospital Corp., the operator of King’s Daughters Medical Center, has agreed to a $40.9 million settlement to settle allegations that the hospital billed Medicare and the Kentucky Medicaid program for medically unnecessary procedures and had illegal financial relationships with physicians who referred patients. 

The government had alleged that the hospital billed the federal programs millions of dollars for unnecessary coronary stents and diagnostic catheterizations performed by its physicians on Medicare and Medicaid patients between 2006 and 2011. The physicians allegedly falsified patient records in order to justify the procedures. The hospital was also alleged to have violated the Stark Law by paying some of its cardiologists unreasonably high salaries that exceeded the fair market value of their services.

In addition to the monetary penalty, the hospital agreed to enter into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services’ Office of Inspector General (OIG), which will require it to improve compliance and have its Medicare and Medicaid claims reviewed by a third party for five years. The DOJ and OIG were assisted in the investigation by several other federal agencies and the Kentucky Attorney General’s office.

Most of the settlement will be paid to the federal government. Kentucky will receive about $1 million as the state’s share of the recovered Medicaid funds.