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Cardiologists hit Citizens with 2nd lawsuit

By JR Ortega
April 13, 2013 at 10:01 p.m.
Updated April 13, 2013 at 11:14 p.m.

The Anti-Kickback Act

The act prohibits anyone from knowingly and willfully soliciting or receiving any payment directly or indirectly in exchange for referring a person to a person or entity for the furnishing of any item or service for which payment may be made in whole or in part under a federal health care program including services provided under the Medicare and Medicaid programs.

The act puts restrictions on referrals by physicians to providers of certain designated health services under the Medicare and Medicaid programs. The act says if a physician or family member of the physician has a financial relationship with an entity, the physicians may not make a referral to the entity for the furnishing of designated health services reimbursable under Medicare and Medicaid programs. The entity may not bill for designated health services, including inpatient and outpatient hospital services, furnished from a prohibited referral.

A timeline of the conflict

December 1995

Dr. Dakshesh "Kumar" Parikh gets staff privileges at Citizens Medical Center.

December 1998

Dr. Harish Chandna gets staff privileges at Citizens.

August 2000

Dr. Ajay Gaalla gets staff privileges at Citizens.

Until 2007

Drs. Parikh, Chandna and Gaalla regularly admit patients to Citizens Medical Center.


  • Citizens implements bonus system for its emergency room physicians.
  • Citizens puts cardiologists on staff.
  • Hospital states Parikh, Chandna and Gaalla need to refer patients to Citizens' cardiac surgeon, Dr. Yusuke Yahagi.
  • Citizens takes action against cardiologists.
  • Cardiologists receive letters from Citizens questioning why they are not referring patients to the hospital.

February 2010

  • Cardiologists file qui tam lawsuit, claiming the hospital violated the False Claims Act. The lawsuit is sealed.
  • Hospital passes a resolution that grants its cardiologists exclusive right to practice at the hospital, barring Parikh, Chandna and Gaalla from being able to work at Citizens.
  • Cardiologists file lawsuit claiming Citizens barred them from practicing not based on their merit and expertise but because of financial and racial reasons.

July 2012

  • Judge grants immunity to board members in lawsuit.

December 2012

  • Cardiologists receive an $8 million settlement in the case, citing financial and racial complaints.

February 2013

  • Second lawsuit claiming the hospital violated the False Claims Act unsealed in federal court.


These are the key points alleged by cardiologists Drs. Dakshesh "Kumar" Parikh, Harish Chandna and Ajay Gaalla:

Citizens Medical Center paid bonuses to its emergency room physicians based on revenue generated from their referrals to the hospital's Chest Pain Center.

Citizens employed five cardiologists at salaries many times more than those cardiologists earned in private practice.

Citizens gave discounted office space rent and other benefits to Dr. Bill Campbell and his partners.

Citizens' illegal practice of medicine has resulted in and continues to result in fraudulent billing to federal health care programs.

Citizens' self-referral practices and "economic credentialing" violate the Anti-Kickback Act and have resulted in and continue to result in fraudulent billing to federal health care programs.

Citizens violated the Medicare Conditions of Participation by conditioning medical staff privileges on criteria other than individual character, competence, training, experience and judgment.

Citizens' violation of the Stark Act and submissions of claims to Medicare and Medicaid arising from those violations constitute false claims under the False Claims Act.

Citizens paid for advertisements for certain preferred physicians, and it advertised falsely for those physicians.

Citizens' billings to the Medicare program for unnecessary procedures and hospital-acquired trauma caused by some of the hospital's employees' and physicians' negligence violate the False Claims Act.

Citizens operates a colonoscopy screening program and pays the participating gastroenterologists illegal payments in exchange for referrals to the hospital.

Three cardiologists feuding with Citizens Medical Center are again suing the county hospital, claiming it gave kickbacks to several of its staff physicians.

The federal Office of Inspector General is investigating the allegations, hospital lawyer Kevin Cullen confirmed.

The lawsuit, filed by Victoria cardiologists Drs. Dakshesh "Kumar" Parikh, Harish Chandna and Ajay Gaalla on behalf of the United States, claims the hospital gave kickbacks to several employed physicians in exchange for patient referrals.

The lawsuit names several hospital staff members, including emergency room physicians and gastroenterologists.

The lawsuit, filed in 2010, was sealed until late February, when the U.S. Attorney for the Southern District of Texas sent an order saying the U.S. "is not intervening at this time." The inspector general's office would not comment on its investigation.

The 53-page lawsuit claims the hospital presented false and fraudulent payment claims to the government, which would be a violation of the False Claims Act.

Cullen said the inspector general's office subpoenaed the hospital in February, but Citizens officials were unaware of the lawsuit until they were served last week.

"We intend to vigorously defend the lawsuit," Cullen said.

Cullen and Gary Eiland, a Houston lawyer specializing in health care law, are working with the hospital to issue a response to the suit, due in May, Cullen said.

Cullen would not comment further about the lawsuit, and neither would Eiland, who said he was still gathering information about the suit.

"We're still assessing the allegations," Eiland said. "It's really premature."

Eiland did say that qui tam lawsuits, a lawsuit in which plaintiffs act on behalf of others, are becoming more common.

"There is a proliferation of qui tam lawsuits against health care," he said.

Neither the cardiologists nor their lawyer could be reached for comment to explain why they chose to file a suit on behalf of the government rather than report their concerns to an investigating agency.

The lawsuit alleges the hospital paid bonuses to its ER physicians for referrals to the hospital's chest pain center.

Once referred to the pain center, the hospital performed unnecessary nuclear stress tests, even on patients of the three cardiologists without their knowledge, the lawsuit claims.

Between Sept. 16, 2008, and March 18, 2010, the hospital paid emergency room physicians $647,049.25 in bonuses, according to the lawsuit. Between March 18, 2010, and July 22, 2010, an additional $190,665 was paid.

The three cardiologists claim the hospital administration was purposely steering patients from them to the hospital in order to make more money through unnecessary testing.

The lawsuit also stated the hospital violated the Anti-Kickback Act and the Stark Act by providing discounted office space to its cardiologists.

The lawsuit also claimed gastroenterologists participating in the hospital's colonoscopy screening program received illegal compensation for referrals to the hospital.

Though the suit is just coming to the surface, the incidences in question date asfar back as 2007.

According to details in the lawsuit, both Dr. Yusuke Yahagi, a Citizens cardiologist, and David Brown, hospital chief executive officer, sent letters to the three cardiologists questioning why they were not referring patients from their private practice on Red River Street to Citizens.

The three cardiologists claim Yahagi had a high mortality rate with his patients, and they were doing what was in the best medical interest of the patient.

In February 2010, the hospital passed a resolution that granted its cardiologists exclusive right to practice at the hospital, barring Parikh, Chandna and Gaalla from being able to work at Citizens.

In response, the cardiologists filed a 2010 lawsuit.

That lawsuit was settled in December 2012, with the three cardiologists accepting an $8 million settlement in the case.

Brown would not comment on specific allegations of this newest case but did say the entire lawsuit "is all very confusing."

"It's important to understand that this action looks exactly like that other action," Brown said comparing the two lawsuits.



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