United Memorial Forges Ahead

January 24, 2003
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GREENVILLE — Settling criminal fraud charges against United Memorial Health System will enable executives to get back to planning for the future.

Under the plea agreement reached this month, United Memorial agreed to pay a fine of more than $1 million and $750,649 in restitution to Medicare, Blue Cross Blue Shield, Medicaid and managed-care company Priority Health for medically unnecessary procedures performed by Dr. Jeffrey Askanazi, an anesthesiologist and physician who ran a pain clinic in Greenville and practiced at several area hospitals, including United Memorial. He was convicted in December 1998 on several charges of billing Medicaid, Medicare and private insurers for unnecessary pain-management and anesthesia procedures he did not perform.

United Memorial’s board of directors acknowledged in the plea agreement that its administrative and medical management knew, “or at least should have known,” that Askanazi performed a number of unnecessary procedures.

“This ends the long nightmare we have all been through and allows us to focus all of our energy on our mission,” United Memorial Board President Franz Mogdis said.

While a “difficult pill to swallow,” the plea agreement avoids a costly trial for United Memorial, Mogdis said.

As it fought the fraud charges, United Memorial was preparing to undertake $6.4 million in upgrades at its two hospitals, United Memorial Health Center in Greenville and Kelsey Memorial Health Center in Lakeview.

The plea agreement requires United Memorial to serve a three-year probation and adhere to a compliance plan drafted to assure the hospital follows all state and federal laws. If United Memorial completes the probation, the court will dismiss the case.

The deal brought about the goal of the U.S. attorney handling the case by holding United Memorial responsible while assuring the health system continues to operate, U.S. Attorney Margaret Chiara said.

If convicted, United Memorial would have been excluded from federal Medicaid and Medicaid programs.

The case was one of the first where a hospital was prosecuted criminally for fraud and was “intended to clearly convey the message that health care fraud is a crime and will be prosecuted,” stated a statement from the U.S. Attorney’s Office.

“Protecting the integrity of the Medicare/Medicaid system is of paramount importance to the United States Attorney’s Office. Not only does health care fraud waste taxpayers’ dollars, it can also jeopardize patient safety,” Chiara said.

In a March 2002 indictment, the federal government accused United Memorial of conspiracy and fraud in connection with the Askanazi case. Prosecutors accused United Memorial management of brushing aside and refusing to act on concerns and complaints from staff about Askanazi’s lucrative practice that was helping the health system’s bottom line.

Two physicians indicted with the hospital who served on committees supervising the medical staff and were accused of conspiring with Askanazi, Dr. Daniel Seward and Dr. Matthew DeWys, also agreed to plead guilty to a misdemeanor charge, pay a $60,000 fine each and restitution, and serve 500 hours of community service providing care to indigent patients.

Seward and DeWys served on the committees reviewing Askanazi’s work, even after they formed a partnership with him for a clinic.  

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