Kalispell Regional Healthcare Hospital meets whistleblower settlement mandates

Kalispell Regional Healthcare has met initial deadlines for making required improvements to its compliance program as part of a settlement with the federal government over a whistleblower complaint against the hospital.

In September 2018 Kalispell Regional Healthcare reached a settlement with the federal government for $24 million, ending a whistleblower complaint filed by Jon Mohatt, the former chief financial officer of the hospital’s Physician Network, in 2016. The lawsuit alleged the hospital knowingly violated federal anti-kickback statutes, known as Stark Law, and the False Claims Act by compensating physicians far above fair market rates and reaping financial benefits from a system of self-referrals dating back to at least 2011.

It has been a little less than six months since a corporate integrity agreement was signed last September, launching a five-year time-frame during which the Office of Inspector General’s Department of Health and Human Services will provide oversight into the hospital’s compliance program for federal statutes.

Among many requirements, the agreement required Kalispell Regional to submit a report within 120 days after the signing, updating the Office of Inspector General on the hospital’s accomplishments over the course of the first 90 days.

According to Kalispell Regional officials, that deadline was met in late January and the hospital has established new policies and procedures and updated existing ones in recent months as a result of the agreement.

“Many of these were already in place in some form, but we filled in slots that we needed to make sure that it was clear in the corporate integrity agreement that we were doing everything that we’re supposed to do,” said William Gibson, Kalispell Regional interim chief executive officer and general counsel.

Conditions of the agreement call for the hospital to address pivotal issues from the lawsuit. For example, the crux of the complaint, filed under the False Claims Act, said the hospital violated federal Stark Law by charging rates well above fair market value, which led to an influx in self-referrals — a system from which some physicians and hospital executives allegedly benefited greatly.

“So when you’re looking at a fair market value for what you pay the physician, it needs to have some relationship to the services that the physician is providing without taking into account the amount of money you’re going to make on the other side of the equation,” Gibson said.

He said Kalispell Regional is required to document and keep track of all contracts and payments, which the hospital is doing primarily by way of a special software program. The thorough documentation allows for close monitoring of any financial arrangements between clients, physicians and other financial stakeholders.

One of the stipulations in the agreement that was already in place with the hospital’s previous compliance plan includes the requirement to establish a compliance council. Gibson said the council is already in place and is made up of a number of department heads who come together on a regular basis to discuss compliance concerns.

Other requirements for the hospital’s compliance plan that did not pre-date the lawsuit include the hiring of a compliance officer and the implementing of a training program.

The new system compliance officer, Mike Onusko, was hired about one month ago and the hospital has established a training plan to bring hospital employees up to speed on the corporate integrity agreement itself, information surrounding the Stark Law and more.

“These govern what we are able to do from a contracting standpoint and those people who are directly involved in contracts and negotiations will receive more in-depth training,” Gibson said. “If people are going to work with us, then this is part of the reality that we have to address.”

Gibson said hospital executives have identified 3,670 people who will receive training on some level over the course of the year.

The settlement requires Kalispell Regional and six associated entities to pay a total of $24 million over the course of the next six years. The hospital had allotted $21.5 million in advance of the settlement, which became the largest False Claims Act recovery in the state.

Reporter Kianna Gardner can be reached at 758-4439 or kgardner@dailyinterlake.com.