2 hospitals in $2.65M settlement with feds

Two Catholic Health Services' hospitals have paid about $2.65 million as part of settlements with U.S. regulators after the hospitals reported improper financial and administrative relationships with physician groups.

In the settlements reached in July and disclosed Sept. 26, St. Catherine of Siena Medical Center in Smithtown agreed to pay the U.S. Health and Human Services Department $2.6 million because of a questionable contract with an endoscopy group to manage the hospital's outpatient endoscopy suite.

Good Samaritan Hospital Medical Center in West Islip agreed to pay $55,000 after the hospital improperly contracted with a physician group to recruit doctors to work at its outpatient endoscopy suite.

Chris Hendriks, spokeswoman for Catholic Health Services, said the questionable practices came to light after a routine internal review at St. Catherine's that was then extended to CHS' other five hospitals and nursing facilities. The findings were immediately reported to HHS, she said.

The settlements involved "no admission of liability or wrongdoing by the two hospitals and there was no finding of intentional wrongdoing," CHS said in a news release. Nor did the problematic arrangements affect patient care, CHS said.

According to St. Catherine's settlement agreement with HHS' Office of Inspector General, from Feb. 27, 2006, through Aug. 31, 2010, an unnamed physician group "received payments that were not consistent with fair market value and received compensation for services that were not performed." The inspector general also contended that the hospital had an agreement with an unidentified doctor "which provided remuneration that was not consistent with fair market value for the contracted services provided."

The settlement takes place against the context of civil federal rules that prohibit a hospital from funneling money or gifts to physicians through false arrangements or through excess payments for services in return for patient referrals.

According to the settlement, Good Samaritan contracted with another unnamed physician group from July 1, 2009, through May 5, 2010, to find and hire doctors for the hospital's endoscopy suite. The group "received accelerated payments from Good Samaritan that did not comply with contractually agreed-to payments." The payments also were "not consistent with fair market value," the inspector general found.

Hendriks said the hospitals still work with the two doctor groups but no longer have the improper financial relationship.