HYANNIS — Cape Cod Hospital has agreed to pay the federal government $24.3 million to settle allegations that it knowingly submitted hundreds of Medicare claims between 2015 and 2022 for transcatheter aortic valve replacement (TAVR) procedures without complying with government protocols for screening patients for the procedure.
The hospital will pay $14,075,983 in restitution and $10,317,524 in penalties over the next 12 months.
The settlement is the result of a suit filed in U.S. District Court in Boston in July 2022 by cardiologist Richard Zelman, a whistleblower who triggered an investigation by the Justice Dept. into the hospital’s evaluation and reporting practices.
Zelman filed suit under the False Claims Act, which allows private citizens to sue on behalf of the United States to recover money that was fraudulently obtained. He will receive 17.5 percent of the settlement money, or $4.36 million.
TAVR procedures became available at Cape Cod Hospital in 2015 for patients suffering from a serious condition that restricts blood flow from the heart to the rest of the body. The procedure involves replacing the damaged valve causing the problem with an artificial valve.
Federal investigators found that not enough doctors had examined each patient’s suitability for the procedure to meet Medicare requirements, and that physicians didn’t document and share their evaluations with the medical team responsible for performing the procedure.
“Medicare permitted coverage for this newly developed cardiac procedure only under certain conditions to ensure patient safety,” said Joshua Levy, acting U.S. attorney for the District of Massachusetts, in a written statement. “Cape Cod Hospital ignored those rules and received millions from Medicare to which it was not entitled. This conduct persisted for years despite internal warnings.”
Levy said the investigation and settlement “ensure that patient safety is prioritized over a hospital’s bottom line.”
False Claims Act
According to an online written explanation of the False Claims Act by Bryan Lemons, a senior legal instructor at the Federal Law Enforcement Training Center, a private citizen or “relator” can file a claim on behalf of the U.S., which the government then investigates. The government may opt to assume primary responsibility for the case in what is known as a “qui tam” action, or allow the relator to conduct the lawsuit.
In either case, the relator is entitled to a portion of the proceeds recovered by the lawsuit.
According to the settlement agreement, Cape Cod Hospital employed its own interventional cardiologists (including Zelman) but contracted with Brigham and Women’s Hospital to provide cardiac surgeons for procedures including TAVR. Cape Cod Hospital billed Medicare for the facility fee and the services of its staff, while Brigham and Women’s Hospital billed for the work of the surgeons.
The Independent reported in 2022 that Zelman had approached Brigham and Women’s with a list of concerns about its surgeons in October 2021, and that the Brigham had conducted a review of all the TAVR procedures its surgeons had performed at Cape Cod Hospital shortly afterward. In June 2022, Brigham and Women’s reimbursed Medicare for all payments it had received for the TAVR procedures its surgeons had performed at Cape Cod Hospital.
Meanwhile, Cape Cod Hospital did its own review of payments it had received for a sampling of 90 TAVR procedures and concluded that only four out of the 90 did not comply with Medicare’s standards for reimbursement. The hospital refunded the government for the four improper submissions.
When federal investigators reviewed 105 of Cape Cod Hospital’s reimbursement submissions, however, they concluded that more than half of the sample did not comply.
Based on that sample, federal investigators argued that at least half of the 800 reimbursement requests for TAVR procedures Cape Cod Hospital had submitted between 2015 and 2022 were not compliant.
Reactions to the Settlement
The Independent could not reach Dr. Zelman for comment.
In a statement posted to his website, Zelman’s attorney, Gregg Shapiro, wrote, “We understand the settlement amount represents the largest-ever False Claims Act recovery from a Massachusetts hospital.”
Asked for further comment, Shapiro said, “Dr. Zelman appreciates that the government conducted a thorough investigation and achieved a successful resolution.”
Cape Cod Hospital is part of Cape Cod Healthcare, which also owns Falmouth Hospital, six urgent care centers, a network of primary care and specialist practices, and home care and hospice programs.
The Independent asked Michael Lauf, president and CEO of Cape Cod Healthcare, to comment, but instead a spokesperson sent a statement from Cape Cod Healthcare: “The settlement contains no allegations or admissions that patients who received TAVR procedures at Cape Cod Hospital were harmed or that Cape Cod Hospital billed Medicare for procedures that were not performed or were not clinically indicated,” the statement said.
The statement went on to say that “many of the individuals who provided the services at issue are no longer employed or contracted to provide services at Cape Cod Hospital.”
Cape Cod Healthcare’s board chair, Bruce Johnston, sent a statement on behalf of the board: “Though it is unfortunate to be in this situation, the Board of Trustees remains confident in and supportive of the organization’s leadership. During Michael Lauf’s tenure, Cape Cod Hospital has been recognized numerous times for its excellent care and has significantly enhanced its operational and financial position.”
The board’s statement continued: “Under Lauf’s leadership, Cape Cod Hospital has grown both in reputation and in size and now eagerly anticipates the opening of the Edwin Barbey Patient Care Pavilion, which will house a new cancer center, consolidate the hospital’s cardiology programs, and add 32 more medical/surgical beds to address increasing demand.”
The Other Lawsuit
Zelman had been medical director of Cape Cod Hospital’s Heart and Vascular Unit and had also sued the hospital in Barnstable Superior Court in December 2022, alleging he had been improperly fired in retaliation for whistleblowing. Zelman’s concerns in that lawsuit were not limited to the TAVR procedures and included an allegation that Lauf had directed the hospital to prioritize private insurance patients over “managed care” patients, including those on Medicare and Medicaid, when it came to the allocation of new cardiac “sentinel” devices.
According to his lawsuit, Zelman brought that information to a former chair of Cape Cod Healthcare’s board of trustees, who informed the then-current chair, who then held a meeting with Lauf on the subject.
Lauf then agreed to assign the devices to all high-risk patients, including those on Medicare, but went on to retaliate against Zelman, according to his suit.
Cape Cod Healthcare denied that and other claims in Zelman’s December 2022 complaint, and that lawsuit was withdrawn a few months after it was filed.
