Robert Wade took it as a challenge when a colleague told him a few years back he’d never be able to launch a national health care practice from the South Bend market, that instead he would need a Chicago or Washington, D.C., address.
“I said, ‘You watch me,’” Wade recalled.
A partner in Krieg DeVault LLP’s South Bend/Mishawaka office, Wade and his team last month were hired as consulting counsel to a Florida hospital that agreed to a historic settlement in March to resolve federal physician-referral claims under the Stark Law.
“It’s the largest settlement for a hospital to date” under the law, Wade said of the $85 million agreement with the Department of Justice by Halifax Health Medical Center of Daytona Beach, Fla. “We’re treading in a bunch of new ground, so to speak, and I’m happy to be a trailblazer in respect to this role.”
It’s confirmation that a small-town practice can hit the big time.
“I would estimate over a five-year period we’re probably talking somewhere around $3 to $4 million” in billings for the team of six or seven attorneys. “Obviously it is a significant engagement.”
The Stark Law involves Medicare and Medicaid and generally bars physicians from referring those patients for designated services to an entity where the doctor or a family member has a financial relationship, either as an owner or employee.
A Halifax compliance officer filed a qui tam whistleblower suit after she said her concerns about payments to physicians were being ignored. She claimed a bonus structure for oncologists included incentives for referrals that violated the Stark Law, and earlier this year a federal judge in Orlando agreed.
The government alleged Halifax had contracts with six oncologists that provided bonuses as an incentive for ordering prescription drugs and tests. The government also claimed Halifax paid neurosurgeons more than fair-market value for their services.
As part of the settlement, Halifax is required to be under federal oversight for five years in accordance with a corporate integrity agreement. Wade will work with the hospital’s board to implement the agreement and oversee compliance programs.
According to the Department of Justice, the settlement requires the hospital to undertake substantial internal compliance reforms and submit Medicare and Medicaid claims for independent review over the next five years.
“Part of my role is to be the eyes and ears of the board as they’re carrying out their mandated programs,” Wade said. The first part of the compliance program that began this month involves training for all members of the medical staff on practices that could run afoul of the Stark Law, Anti-Kickback Statute and related laws. Training is highly tailored and individualized.
Halifax chose to settle rather than contest the alleged violations in court, which could have resulted in risking liability of more than $800 million. By the time of settlement, Halifax had spent more than $20 million in legal fees, he said.
“Stark produces what I call very Draconian outcomes,” Wade said. “This is a hyper-technical violation,” he said of the doctors’ bonus pool that got the hospital in trouble. The Halifax settlement, and some even larger judgments against providers for Stark violations “are really putting a chilling effect on the entire industry.”
“Lots of hospitals are doing a review of financial arrangements,” Wade said. Providers realize they can avoid some of the more severe penalties by self-reporting referral structures and other arrangements they believe might violate the Stark Law.
Krieg DeVault Executive Committee member Thomas Hutchinson said Wade’s practice underscores the firm’s commitment to having a nationally recognized health care practice.
“We are very honored that Bob was chosen as the compliance expert to Halifax Health to assist in fulfilling the hospital’s corporate integrity agreement as part of the largest Stark Law settlement in history. Bob’s strong national reputation in the area of Stark Law and health care compliance is a natural fit for the hospital,” Hutchinson said.
Wade said more than a couple dozen firms competed for the Halifax consulting work. As someone who’s written and lectured extensively on Stark and related laws and is viewed as a thought-leader on such topics, he said, “I was watching the case from afar” before his team was selected.
With prior experience as in-house counsel at St. Joseph Regional Medical Center in South Bend and assurance he would be the Halifax board’s point person, Wade had a winning proposal. “One of the board members questioned me and said, ‘Are we hiring you or hiring the people from your firm?’”
Wade said he replied, “I am going to be front and center. I’m going to be the face for this project.”
The Krieg DeVault group’s clients now include about 25 hospitals around the country for the practice focused largely on Stark Law and fair-market value issues. Wade is in high demand, currently traveling to Daytona Beach at least a couple of times a month.
And now, he’s got about as far-flung a national practice as one can get.
“Two weeks ago, as I left Daytona Beach, I flew to Honolulu for a one-day meeting in Honolulu and flew back,” he said in early June. “So far, since Jan. 1, I’ve logged about 75 nights in a hotel room.
“To have a national practice, that’s something you have to commit to,” he concluded.•
Stark Law at a glance
Who: Named for Rep. Pete Stark (D-Calif.) Also known as the Physician Self-Referral Law.
What: Prohibits a physician from referring Medicare or Medicaid patients to an entity for a designated health service if the doctor has a financial relationship with the entity.
When: “Stark I” effective 1992; “Stark II” effective 1994.
Penalties: Civil penalties for violations can range up to $15,000 per billed medical service provided in violation of the law. Providers may be excluded from Medicare.
Citations: 42 U.S.C. § 1395nn (as relates to Medicare); 42 U.S.C. 1396b(s) (Medicaid).