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Teaching hospital faces lawsuits due to
retaliation Be forewarned: Allegations of retaliation, whether true
or false, from employees who report perceived compliance violations can
lead to a chain of whistleblower lawsuits and federal investigations.
That's the bitter lesson Oregon Health Sciences University
in Portland (OHSU) learned over the last three years. The university,
which includes three medical schools, two hospitals, and dozens of clinics
and research centers, is faced with multimillion dollar lawsuits from
three former employees claiming wrongful discharge. The government has
so far spent more than a year investigating OHSU on charges of Medicare
fraud. One of the three ex-employees who sued the university,
David Ostad, won $382,000 in damages on May 25 after a federal jury ruled
that he was fired out of retaliation. Ostad, a former resident, filed
suit against OHSU for $7 million in September 1998, claiming that the
university's Chief of the Division of Plastic and Reconstructive Surgery
Alan Seyfer fired him in August 1997 in retaliation for questioning Seyfer's
billing practices, according to court documents obtained by Medicare Compliance
Alert. Specifically, Ostad accused Seyfer of billing Medicare and other
insurers for surgeries he did not perform or did not supervise, a university
spokesperson says. Seyfer, who denied any wrongdoing, retired on June
30 to go into private practice, according to OHSU legal counsel Carey
Critchlow. A university statement says a faculty panel fired Ostad
for an "inability to treat patients in a reliably safe manner"
and that an in-house investigation found only one billing error in Seyfer's
records, which was repaid. There was also no evidence that Ostad complained
about any misconduct to anyone above Seyfer before Seyfer recommended
him for termination, though Ostad did file a complaint to Seyfer's supervisor
afterwards, according to a source involved in the case. Then the situation snowballed. This May, the same month
Ostad won his suit, former OHSU nephrologists David McCarron and William
Bennett separately sued OHSU for $8 million and $2.5 million respectively,
claiming wrongful discharge. McCarron, who has been on indefinite unpaid
administrative leave since November 1998, claims he was forced out of
his position as OHSU Head of the Division of Nephrology because he complained
that the university routinely overbilled federal grants twice for the
same costs, according to the lawsuit obtained by Medicare Compliance Alert.
Bennett says in his lawsuit that OHSU retaliated against him and forced
him to retire his tenured professorship in November 1999 for going to
the IRS to see if the university's retirement plans were compliant with
federal law. This kind of domino effect is typical when it comes to
lawsuits from former employees, says whistleblower attorney Marc Raspanti,
Miller Alfano & Raspanti, Philadelphia. "This falls into the
usual pattern of escalation, though it's usually not a resident that files
the first suit, because residents are just starting their careers and
filing suits can blackball them for life. It's usually a more seasoned
doctor, because they would be more willing to take the brunt of blowing
the whistle," he says. But ex-employee lawsuits may be the least of what the
university has to deal with. OIG and the U.S. Attorney's Office in Portland
began subpoenaing OHSU in April 1999 in connection with an investigation
into potential Medicare billing fraud. The federal government has filed
three more subpoenas since. Upon reviewing the subpoenas, attorney Bill Maruca, Kabala
& Geeseman, Pittsburgh, says, "It's a huge fishing expedition.
The government wants to cart out a truckload of stuff here. They're asking
for a lot of things that relate to internal and external audits, and if
the university handled things properly by having legal counsel supervise
the audits, they have a better opportunity to protect the results of those
audits under attorney-client privilege and the attorney work product doctrine.
... They're focusing here on the same issues the PATH initiative did."
Maruca was the former chair of the PATH Task Force for the American Health
Lawyers Association. Although OIG, the U.S. Attorney's Office and Ostad's attorney,
Richard Busse, refuse to comment on what connection, if any, exists between
the federal investigation and Ostad's complaint, the subpoenas, which
were filed seven months after Ostad filed suit, mention Seyfer by name
and request 43 of his patient records. The federal investigation has already cost the university
an estimated $500,000 in legal fees, says Paul Kirk, president of the
OHSU faculty practice group. In response, OHSU is charging its 530 doctors
a 1% tax on gross revenues for a reserve fund to pay legal defense fees
and, if necessary, to pay the cost of any fine levied against the university.
The tax, which was instituted three months ago, is expected to collect
about $600,000 this year, Kirk says. The university is hiring another 23 certified coders to
add to the 18 already in place at a cost of nearly $1 million annually,
Kirk adds. The coders will review all inpatient billing to confirm it
with documentation from the patient record and conduct regular audits
of all outpatient billing. Also, within the last year, seven university
divisions have hired reimbursement managers to monitor the billing and
collection process and review all aspects of patient billing. Raspanti advises other providers to see the OHSU's troubles as a cautionary tale. "Typically, the compliance program is on one planet and the teaching program is on another planet, and they meet maybe four times a year. If the compliance program was in effect, no lawyer worth his salt would have fired the resident. You should really try to find less confrontational ways of dealing with people -- otherwise, you're going to find it much more costly in the end, just like this university has," Raspanti says. ©2000 UCG. |