Metro Still Embroiled In Litigation

December 12, 2003
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GRAND RAPIDS — A former executive who sued Metropolitan Health Corp. and an affiliated physicians group, will pursue the remaining portion her whistleblower case, alleging she was fired in retaliation for raising her concerns.

Mary Scott, Metro Health’s one-time senior vice president of network development, is claiming multiple violations of federal laws and improper business practices

In what’s building as a classic “he said-she said” scenario, Scott’s attorney says her career has been ruined because of her ouster early this year from the health system.

Metro’s CEO says Scott’s removal from her post resulted from corporate reorganization and was unrelated to any of the concerns she first raised in the spring of 2002.

Attorney David Haron, of the law firm Frank, Stefani, Haron & Hall in Troy, also calls “outrageous” Metro’s assertion that it voluntarily self-reported Scott’s concerns to the federal government.

He claims health system executives ignored her concerns about alleged improper billings to Medicare and cozy business relationships with physicians to steer patients to Metro facilities, which would violate federal anti-kickback laws.

“The only reason they disclosed everything was because of her actions and because she told them she was going to the government,” Haron said. “She had exhausted any belief that these things were being corrected.”

Metro Health last week reached an agreement with the federal government to pay $6.25 million over four years that settles all but the retaliation claim in Scott’s whistleblower lawsuit. That action was filed in July 2002 and remained sealed until Nov. 28, shortly after the U.S. Department of Justice intervened in portions of the case.

While agreeing to the settlement, which only covers issues related to improperly billing Medicare, Metro Health executives adamantly deny any wrongdoing, strongly dispute the allegations and believe they would have prevailed in court.

They said settling the case and paying the fine is a “sound business decision” that avoids costly and lengthy litigation at a time when the health system is focused on developing and relocating to a new $150 million hospital now under construction in Wyoming.

“Even though we’d like to fight the good fight, we have to get this behind us and move on,” Metro Health President and CEO Mike Faas said. “We don’t agree with it. We’ll never agree with it.”

The agreement with the federal government “is neither an admission of liability by Metropolitan nor a concession by the United States that its claims are not well founded,” settlement papers state.

Fighting the allegations in court would have cost Metro Health as much in legal fees as settling and would have come with the uncertainty of a jury trial, Faas said.

Prolonged litigation also would have become a significant burden to the health system and staff, draining resources at a crucial time away from development of the new hospital and an adjoining “health care village” envisioned for the Wyoming site.

Adding to the incentive to settle the case is the pending public sale of millions of dollars in bonds to finance the development. A federal lawsuit could very well cause investors to steer clear of the bond sale.

“We found ourselves in a no-win situation. The alternative would have been an excessive and lengthy legal battle,” Faas said. “We really wanted to focus on that development.”

In court papers, Scott says she first raised numerous concerns to management and took them to the executive committee of the health system’s board in April 2002.

The issues go well beyond improperly billing Medicare, the lack of supporting documentation for billings, and not having written physician orders for procedures – issues that were at the heart of last week’s settlement between Metro and the government. Scott’s lawsuit also claimed that Metro structured business arrangements with physicians that provided financial incentives to steer patients to the hospital and, according to court papers, “used large sign-on bonuses, loan repayments and other payments to secure referrals,” a violation of a federal law that prohibits physicians from referring Medicare and Medicaid patients to facilities in which they have a financial interest.

The health system, according to Metro executives, responded to Scott by retaining outside legal counsel in May 2002 to look into her concerns. The firm recommended that the health system report the issues involving Medicare to the federal government, which Metro executives did on June 11, 2002, according to court documents.

“We think we did the right thing in this situation. We think we handled it right,” said Jim Childress, Metro’s vice president of marketing and public relations.

He notes that the settlement with the government, which Scott agreed to and signed on Dec. 5, covers far less than the dozens of claims she made in the lawsuit. The settlement with the government is for seven separate violations involving Medicare, according to court documents.

“They looked at all that stuff there and said ‘there is nothing here,’” Childress said. “It’s unsubstantiated.”

On June 12, 2002, Scott was placed on paid administrative leave because the working relationship between her and Metro management had broken down, Childress said.

“The work environment deteriorated to the point where we thought it was best for everybody,” Childress said.

Scott was then let go in January 2003. In her lawsuit, she claims she was fired in retaliation for raising her concerns; Metro says Scott’s and other positions were eliminated in a broader reorganization and that her release occurred five months before executives even learned about the lawsuit, which under the federal whistleblower law remained sealed until federal prosecutors could investigate the case and decide whether to intervene.

Scott, even though she will receive 18 percent of the amount Metro will pay, will pursue her retaliation claim, Haron said. Scott, who earned a salary “in the good six figures” while at Metro Health, had a “tremendous resume,” has been unable to find work and until recently unable to discuss or explain the situation to prospective employers because the case was sealed.

“Mary’s career has been destroyed by their actions,” Haron said. “She’s not satisfied with the result of this litigation.”

Haron contends that Metro executives ignored Scott’s concerns about conflicts with federal law, which include paying several of its physicians beyond fair market value in return for directing patients to the hospital, overpaying for a primary-care medical practice acquired in 1996, undercharging two physicians for office rentals, overbilling Medicare, and billing Medicare for procedures that were performed without written authorization from physicians.

“They were stonewalling,” Haron said. “They just wanted her out of there. Her only choice was to go to the government.”

In settling the case, CEO Faas called the amount that Metro must repay Medicare “extreme” and says the dispute is the result of “highly technical and interpretive” federal regulations.

Haron, who specializes in whistleblower litigation, calls that assertion “self-serving and spin.”

“I don’t very much accept these kinds of things as ‘highly technical,’” he said.    

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