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St. Joseph reaches $4.9M short-stay settlement with Justice Department

Catholic Health Initiatives will pay $4.9 million to settle claims by the U.S. Justice Department arising out of St. Joseph Medical Center’s two-year practice of admitting patients unnecessarily.

Catholic Health will pay $4.75 million to the United States and $152,406 to Maryland, the United States Attorney’s Office in Baltimore announced Thursday.

According to the announcement, the hospital voluntarily disclosed in June 2010 that, between October 2007 and October 2009, it had admitted patients for short stays — “typically 1 or 2 days” — that were not medically necessary. This resulted in unwarranted reimbursements to the hospital from Medicare, Medicaid and other federal healthcare programs.

In an emailed statement, Catholic Health said the hospital reached the agreement without admitting liability “in order to avoid the expense and uncertainty of litigation.”

Calls to St. Joseph’s attorney, Daniel S. Reinberg of Polsinelli Shughart PC in Chicago, were not returned.

“Medical providers drain the resources of federal and state health care programs when they bill the government for unneeded medical procedures,” Rod J. Rosenstein, U.S. Attorney for Maryland, said in a statement.

Catholic Health sold St. Joseph’s assets to the University of Maryland Medical System in a deal that was finalized last November.

Under the asset purchase agreement, the resulting entity — now called University of Maryland St. Joseph Medical Center — will not assume any liability for past legal actions against the 145-year-old Catholic community hospital, which is located in Towson.

Englewood, Colo.-based Catholic Health “retains liabilities prior to Dec. 1, 2012,” according to its statement.

St. Joseph reached a separate $22 million settlement with the Justice Department in 2010 over allegations that it had paid illegal kickbacks to MidAtlantic Cardiovascular Associates over a 10-year period and, separately, billed federal benefit programs for “medically unnecessary stents.”

Since 2009, the hospital had been losing about $3 million in revenue a month and the number of admitted patients had dropped drastically.

Thursday’s settlement is part of an effort by the U.S. Department of Justice and the U.S. Department of Health and Human Services since May 2009 to reduce Medicare and Medicaid financial fraud, Rosenstein’s office said. The Department of Justice has recovered $14 billion under the False Claims Act since January 2009, according to a news release from the U.S. Attorney’s Office.