American medical practitioners and providers have coughed up $26.8bn over the past decade to settle federal allegations, including fraud, bribery and patient harm, a Reuters investigation has found. In these cases, paying up means staying in business and, for some, avoiding prison – with the help of US prosecutors – while unwitting patients remain unaware and continue to be treated.
For example, when federal enforcers alleged in 2015 that New York surgeon Feng Qin had performed scores of medically unnecessary cardiac procedures on elderly patients, they did not pursue a time-consuming criminal case.
Instead, prosecutors chose an easier, legal strategy: a civil suit. Qin agreed to pay $150 000 in a negotiated settlement and walked free to perform more cardiac surgeries at his new practice.
Qin faced no judge or jury, not did he admit to wrongdoing. He maintained his licence to practise and neither he nor government officials were required to notify the patients who had undergone unnecessary vascular surgical procedures. Those included fistulagrams to spot issues like narrowed blood vessels or clots, and angioplasties to open clogged coronary arteries.
Within months of the settlement, a nurse working for Qin at his new practice alerted authorities that something seemed amiss. The nurse, who ultimately turned whistle-blower, alleged he was performing unnecessary procedures, mostly on elderly Asian and black immigrants whose costs were covered by the public health programmes Medicare or Medicaid.
Prosecutors indicted Qin in 2018 on a felony count of fraud, which carried a maximum sentence of 10 years in prison. But in a deal in 2021, prosecutors dropped that charge in favour of yet another civil settlement.
Qin kept his New York licence to practise with no restrictions and also agreed to pay $800 000 in annual instalments ending in December 2025, deposited with the Treasury. Additionally, he was banned from billing public health programmes until February 2025.
Department of Justice officials and their investigative partner, the Office of Inspector General (OIG) for the Department of Health and Human Services, said “conflicting evidence from experts” made it legally difficult to challenge Qin’s subjective surgical decisions, which led to the dropped indictment.
While Qin disputed the government’s allegations, his settlement agreement included signed acknowledgement of performing and billing for procedures based on symptoms “insufficient to justify these”.
The nurse who reported Qin to authorities in 2015 was stunned when the criminal charge was dropped.
“A wealthy doctor bought his way out of jail,” whistle-blower Mark Favors said. “How many people get a deal like that?”
The answer is, plenty.
Over the past decade, at least 540 doctors and healthcare practitioners collectively paid the government hundreds of millions of dollars to wriggle out of trouble via civil settlements, then continued practising without licence restrictions despite allegations that included fraud and patient harm, Reuters found.
That figure is the result of the first-ever comprehensive analysis of federal civil settlements and state disciplinary actions.
Separately, more than 2 200 hospitals and healthcare companies negotiated civil deals to sidestep prosecution for offences that included bribery, falsifying patient records and billing the government for unnecessary patient care. In many cases, the physicians and others who committed those misdeeds were not named publicly by prosecutors or forced to pay settlements themselves.
The government collected more than $26.8bn in healthcare-related civil settlements and judgments from 2013 to 2022. In all, Reuters examined 2 788 federal civil settlement cases and administrative actions over that period, including the 540 cases of doctors and other healthcare practitioners who kept their licences after agreeing to deals. Most cases were jointly investigated by the Justice Department and the OIG of Health and Human Services.
Victims, meanwhile, received no share of these settlements – funnelled to a Treasury Department general fund. They have to pursue their own civil cases of restitution for suffering and harm.
Neither the government nor the wrongdoers had to notify affected patients: one only learned last year that her gynaecologic-oncologist had been accused of performing dozens of unnecessary surgeries – such as she underwent – after media reports about his settlement.
The civil justice system has become a key tactic in the government’s battle against healthcare fraud. Compared with criminal cases, these require a lower burden of proof and are quicker to litigate.
But they also offer perks for offenders, sometimes unintended, and often at patients’ expense.
In nearly every civil settlement agreement, defendants were not required to acknowledge liability. What’s more, about nine out of 10 businesses and individuals accused of falsely enriching themselves were allowed to continue billing the very government programmes they were defrauding.
Among those who kept their licences:
The Michigan doctor accused of performing unwarranted radical hysterectomies and administering excessive chemotherapy treatments. He paid $775 000 to settle.
A California doctor – founder and owner of a national hospital chain – accused of hospitalising patients who required less costly, outpatient care. He and his chain paid a combined $37.5m last year to settle that case, which followed two similar settlements totalling $66.25m.
In at least 28 states, boards can issue confidential disciplinary orders to close cases without public disclosure; not even the complainant is allowed to know what happened.
Tracking federal healthcare settlements can be difficult. There is no central government archive. While most civil cases are filed in publicly accessible federal courts, the OIG in the past decade resolved hundreds of civil actions as administrative or internal matters whose public disclosure was scant.
To identify settlements, Reuters created a database of federal civil cases filed by the DOJ, then identified internal actions by the OIG – tasked with policing public healthcare programmes for waste and fraud. Additional cases were tallied from healthcare company disclosures to the US Securities and Exchange Commission and through Westlaw, a legal research service owned by Thomson Reuters.
Doctors’ identities from civil cases were cross-matched with state medical board disciplinary files to determine doctors’ licence status and enforcement history.
Civil settlements may not always be a perfect solution, but they are often vital for understaffed, underfunded prosecutors, said Jim May, a former assistant US attorney, adding that they are a way to hold defendants accountable, particularly those with the money to hire lawyers skilled at forestalling criminal prosecutions with delay tactics.
“Prosecutors want to do the right thing,” May said. “But the resources aren’t always there.”
Another label for this is “pay-to-stay”.
Confidential healthcare investigations can span years before a criminal indictment or civil settlement. Meanwhile, suspected bad doctors continue working, potentially risking more patients’ lives.
Federal enforcers lack the legal authority to suspend or revoke a licence. That power is reserved for state medical boards.
None of the 540 doctors named in individual pay-to-stay cases examined by Reuters had their licence suspended or revoked, either during an investigation or after settlement, even when the boards had received warnings from whistle-blowers or federal agencies that a doctor was suspected of harming patients.
Among such cases was the Michigan gynaecological-oncologist, Vinay Malviya. He kept working – and remains licensed today – despite allegations of administering excessive chemotherapy treatments and performing unnecessary hysterectomies from 2011 to 2017. The state medical board, while aware of those allegations, opted not to suspend his licence during investigations.
Prosecutors said concerns had swirled for years at the hospital system where he worked, prompting executives at Ascension Medical to launch an internal review.
Their report, completed in March 2017, “confirmed several patients had been harmed by his gross negligence … unnecessary procedures and chemotherapy harmful to the patient”.
Later that year, in July 2017, three Ascension Medical employees filed a sealed whistle-blower suit with a federal court. The Justice Department agreed to join the suit and opened its own investigation with the OIG.
The three whistle-blowers claimed that as far back as 2011, Malviya had performed unnecessary radical hysterectomies, once even scheduling a patient for the procedure before examining her.
A financial motive was that both Ascension and Malviya collected more revenue from complex surgeries and treatments, which qualified for higher reimbursements from Medicare.
In August 2021, the DOJ publicly announced a settlement with Ascension, and unsealed portions of the whistle-blower suit. Hospital officials agreed to pay $2.8m based on allegations they had “knowingly” submitted false billing claims from 2011 to 2017.
Malviya’s name was revealed in April 2022 when prosecutors disclosed their settlement deal. He agreed to pay $775 000 and not bill government programmes for patient care for three years, but denied wrongdoing.
He may also face a private malpractice suit.
At least 150 former patients have been interviewed by attorneys who notified Malviya in December about their intent to file a lawsuit; a 182-day waiting period is required to give potential defendants a chance to prepare for court. The case can be filed any time after June.
Malviya labelled claims of patient harm as “false and defamatory”.
Michigan’s Department of Licensing and Regulatory Affairs opened an investigation into Malviya in 2017 after a complaint listing medical summaries of 10 patients.
The board opened its own investigation in 2018 to determine if disciplinary action was warranted, and a 2017 report by a state-hired expert concluded that Malviya, in some cases, “had performed radical hysterectomies where there was no indication for the procedure”. He had also ordered excessive chemotherapy.
The medical board had the legal power to temporarily suspend Malviya’s licence pending its investigation, which occurred about four years before the federal settlement. It chose another option: in 2019, it ordered Malviya to attend a continuing education course and pay $15 000 to the board.
Malviya remains licensed without restriction in Michigan, though his private practice office has closed.
Multiple settlements, no liability
California-based Prime Healthcare Services, a corporate umbrella for dozens of hospitals, is the only medical facility system in the country to have settled three federal civil cases in the past six years.
Not only did prosecutors negotiate multimillion-dollar settlements from Prime corporate entities, they also extracted settlements from several doctors, including the CEO.
In the first settlement in 2018, Prime and its non-profit foundation, with Dr Prem Reddy, founder and CEO, paid $65m in settlements to the government. It was alleged the defendants, from 2006 to 2013 “knowingly submitted false claims” to Medicare by hospitalising patients who could have been treated with cheaper outpatient care, and by “falsifying information concerning diagnoses” to increase reimbursements.
A hospital whistle-blower, who received about $17m from that settlement, said “many patients were told they were far sicker than they were”. The government did not require Prime or Reddy to acknowledge fault or liability, nor were they made to notify patients who were hospitalised unnecessarily.
Similar allegations surfaced again in 2019, and Reddy and two Prime-managed hospitals paid $1.25m to settle allegations of billing for unnecessary hospitalisations and false diagnoses. Patients were not notified because, again the government did not require anyone to acknowledge liability.
Prime and Reddy settled for a third time in 2021.
Prosecutors accused Prime of paying three times the market value to acquire a practice of cardiologist Siva Arunasalam – considered a kickback under federal law. Prosecutors maintained the deal, designed to boost patient admissions to a Prime hospital, was “substantially negotiated” by Reddy.
Additionally, Prime “over-compensated” Arunasalam based on volume of patient referrals.
Prime settled for about $33.7m, Reddy paid $1.7m and Arunasalam settled for $2m. The company also submitted to enhanced monitoring for five years under an “integrity agreement” in which government regulators monitor billings, patient admissions and physician compensation.
The California board’s records show no investigation or discipline of Reddy based on allegations linked to the three settlements. He did not renew his medical licence registration in 2018, but remains the CEO of Prime, which does not require a licence.
Arunasalam also faced no action by the board and remains licensed.
DOJ prosecutors indicted Qin in 2018 for one count of felony fraud, but later dropped this as part of the $800 000 civil settlement in 2021.
His patients were left in the dark as he was not required to notify anyone of the investigation or outcome.
For now, Qin works as a cardiac surgeon in China, where he was born, but he may return to New York when he is allowed to bill government programmes again, his attorneys said.
Reuters article – How doctors buy their way out of trouble (Open access)
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