DOJ accuses Methodist of 'misstatements of law,' 'half-truths' in new kickbacks lawsuit filing

Corinne S Kennedy
Memphis Commercial Appeal
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Methodist University Hospital at 1265 Union Avenue in Memphis, Tennessee.

A week after Methodist Le Bonheur healthcare asked a judge to stop the U.S. Department of Justice from intervening in a lawsuit alleging Methodist and West Cancer Clinic operated a kickback scheme, the DOJ fired back "to correct certain misstatements and mischaracterizations in Methodist’s response."

In two documents, filed Friday, the government accused Methodist's attorneys of making "misstatements of law" and telling "half-truths about the facts."

"Rather than acknowledge to the Court that a legally sufficient reason for intervention exists, Methodist feigns outrage that the United States seeks to hold it accountable," DOJ attorneys wrote in a reply to Methodist.

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Attorneys for Methodist had said in a filing on Oct. 22 the DOJ waited too long to file its motion to intervene and failed to show the proper cause. 

"The United States has offered no evidence at all signaling that the magnitude of the alleged fraud has been expanded in any way," the attorneys wrote in that filing. 

The DOJ filed its motion to intervene Oct. 8, asking the judge to let the department join prosecution of the case. The federal department is also seeking to bring West back into the suit, despite the clinic previously agreeing to a settlement. 

The original lawsuit, filed in the U.S. District Court of Middle Tennessee in 2017 before being unsealed in 2019, alleges Methodist and West Clinic knowingly defrauded federal and state healthcare programs. The suit stated the damages to Medicare and Medicaid programs exceeded $800 million.

According to the lawsuit, Methodist “paid financial inducements, excessive compensation, and kickbacks to independent physicians (the West Clinic Defendants) for generating referrals and lucrative profits to the hospital system.”

Methodist then allegedly rewarded West Clinic doctors with drug profits and a $7 million payment to the clinic's research company. The suit also alleges West Clinic physicians sought to profit from chemotherapy and cancer drugs "Methodist could acquire at deep discounts as a covered entity under the 340B program.”

The hospital system has maintained that there was no wrongdoing and described the relationship with West as a normal and legal business relationship. 

"The government has presented no new evidence that expands the allegations of the original suit or justifies its attempt to intervene in the case now, two years after it declined to enter the litigation," said Tabrina Davis, Methodist's vice president for marketing and communications. "The allegations are without merit, and we will continue to vigorously defend against them."

Corinne S Kennedy covers economic development, soccer and COVID-19's impact on hospitals for The Commercial Appeal. 

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