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Ventura hospital to settle over gifts, loans to doctors
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More from Local NewsCommunity Memorial Hospital has agreed to pay the federal government $1.52 million to settle allegations of improper payments, gifts and loans to physicians over a period of nearly 10 years.
In an agreement released Wednesday by officials of the private Ventura hospital, the government alleges 17 examples of financial arrangements that conflict with federal law.
The 12-page settlement resolves allegations that Community Memorial made prohibited payments to doctors who referred Medicare patients to the hospital, federal officials said. Included were interest-free loans, rental arrangements at below-market rents, employment arrangements with physicians' family members and gifts, the U.S. Attorney's Office in Los Angeles said.
The government did not accuse the hospital of making false or inflated Medicare claims. At issue were violations of laws governing conflicts of interest in the medical arena.
Gary Wilde, president and CEO of Community Memorial, said the hospital voluntarily reported the financial transactions to the government after he arrived in 2004. Wilde said they all were initiated under the administration of former CEO Michael Bakst, who ran the hospital for nearly 25 years before he was terminated in 2003 after a legal battle with doctors.
Federal officials said the fact that the hospital came forward influenced the settlement.
'Transactions news' to board
Wilde said the hospital board of trustees was, with the exception of an interest-free home loan to a doctor, unaware of any of the transactions.
"The others were news to them," he said.
The board decided unanimously to report the transactions, Wilde said. The settlement frees the current administration and board members from criminal liability. Lawyers for the hospital negotiated the settlement with the U.S. Attorney's Office. Wilde said the government initially was seeking $11 million.
Michael Amir, Bakst's lawyer, denied that his client did anything wrong and said the transactions were approved by the board and subject to audits. The attorney said he talked to Bakst on Wednesday night after learning of the settlement.
"The bottom line is Mike just wants to move on with his life," he said. "He had a very successful 25 years with the hospital. He's disappointed that his reputation is being tarnished years after he left."
The settlement does not name the physicians who allegedly engaged in the financial relationships. The document cites interest-free loans of $645,000 given to doctors, a $1 million line of credit to a physician, and reimbursements Bakst received for numerous gifts to doctors and their family members, including a $15,000 Rolex watch, a Louis Vuitton handbag, airline tickets and a $4,000 digital camera.
Some of the allegations involved technical violations, such as arranging for work to be done by independent contractors without the proper paperwork, Wilde said.
Inducements prohibited
With few exceptions, the federal Stark law prohibits hospitals from providing inducements to physicians, Assistant U.S. Attorney Wendy Weiss said. The law generally applies to physicians serving Medicare and Medicaid patients.
"The Medicare system operates under the belief that doctors should be free of financial entanglements when they are making referral decisions, so people are referred on the basis of their conditions and where they can get the best treatment, not on who is giving them some kind of incentive," Weiss said.
Amir said he was surprised that Bakst is being blamed.
"I just find it surprising that his name is being raised three or four years after he left the hospital," he said.
Dr. John Hill, who led the doctors' battle against Bakst's management, said the problems have been corrected under Wilde's tenure. But he regrets that the money for the settlement has to come from the hospital.
"This money that is being paid to the federal government doesn't punish the perpetrator," he said. "The money is being taken from the hospital. It's being taken from the community. That's the real concern I have. The ultimate penalty is misplaced."
Posted by Face on December 20, 2007 at 7:28 a.m. (Suggest removal)
Am I the only one who finds this EXTREMELY disturbing? This is not my America.
Posted by KatieTeague on December 20, 2007 at 8:19 a.m. (Suggest removal)
I think they should include the names of the doctors myself. Bakst wasn't an angel but if he was allowing interest free loans to occur, he had people that stood with him.
Posted by ConTemplate on December 20, 2007 at 9:50 a.m. (Suggest removal)
On the contrary, Face99, and unfortunately, this IS a microcosm of our America, and it IS extremely disturbing. We see examples in all walks of life, from cheating in sports to lying in politics. This picture of our society is very bleak, especially since the predominant reaction to these all-to-frequent stories is a shrug of the shoulders and the comment, "so what, everybody does it, these guys just happened to get caught."
The only way things might change would be if it were publicized that those who received the benefits of this unlawful conduct had to repay the hospital for at least the value of the items received, if not more, so as to soften the blow of the penalty that the hospital has to pay. Voluntary payments sure would be nice, but if that does not happen, I assume there is a way to exert some pressure for repayment through civil litigation.
The Star has an opportunity for some good follow-up reporting on this story; no need to name names, but just give us info about what happens now. Will this be swept under the rug, or will people do the right thing?
Posted by THX1138 on December 20, 2007 at 12:21 p.m. (Suggest removal)
Sadly it appears that many Doctors are in it for the money and curing the ill is secondary.
I agree, I'd bet there's a lot of un-ethical dealings that the public is unaware of.
Posted by mrya_99 on December 20, 2007 at 12:37 p.m. (Suggest removal)
And here WE are... unable to afford medical coverage while these doctors get rich!!! UNBELIEVABLE!!!
Posted by 2smokingbarrels on December 20, 2007 at 1:53 p.m. (Suggest removal)
And here we are....unable to afford a Laker ticket while these athletes get rich!!! UNBELIEVABLE!!!!
Posted by Tom_Johnston on December 21, 2007 at 12:04 a.m. (Suggest removal)
The Bakst legacy lingers....CMH pays the price.
The CMH Board no doubt knew, and allowed his shennangins.
Measure X and O were some of the most divisive, nasty and un-necessary political campaigns of Ventura County history. MB drove that, and a willing Board played along.
CMH should be glad to get off so easy. MB and the Board of CMH cost the community of Ventura County countless millions of dollars in various unnecessary political fights over health care for the under served and under insured in Ventura County. This fine lets them off easy. They owe the people of Ventura so very much more...
That the current CMH is held responsible for the excesses of the MB era is totally correct. The Board allowed things to be, as an entity they hold responsibility for the actions of their employee, Mr Bakst. They no doubt knew what he was up to and condoned his actions over the term of his employment, or at least stood silently by while they occured.
Posted by star on December 22, 2007 at 5:08 p.m. (Suggest removal)
It's not that he was making doctors rich. He was making and handful of his rich buddies richer with illegal kickbacks. If the board didn't know the details, it's because they didn't want to know the details.
That stuff was going on for years before Stark, and while it has diminished it still goes on. Bakst should've had the good sense to exploit the loopholes used by other large hospitals.
Posted by QuestionAuthority on December 23, 2007 at 7:02 p.m. (Suggest removal)
The Doctors who received the "kickback" benefits are just as guilty as the "Hospital/Bakst". They should be held equally responsible in the charge.
And if people don't like the amount of money Professional Ball Players make, stop going to the games. Stop watching it on TV. It's Supply and Demand, don't you know. I don't think they are worth it and I don't participate. Those (most) who are on DRUGS are criminals and scammers just like the Doctors in this article. Pathetic !
Posted by gstbauer on January 14, 2008 at 9:24 p.m. (Suggest removal)
Having been there during a brief period of time, I can say that some of the arrangements were held very close to MB's inner circle, which were shielded from the board by calling it physician recruitment, etc. Yes other hospitals do or did this all the time to induce the consideration for that physician to hospitalize their patients at their hospital, thereby allowing billing to insurance, etc. Yeah it is a business! So understand these types of stinking arrangement happen....are they right? Not at all, it is just another sad commentary on how a dysfunctional system works, and how easily things can become out of control - thank goodness the hospital was able to get some leninency on the fine. And MB will never admit that he did anything wrong or illegal because in his mind (or his perception) what he did was completely within the realm of his reality and the business practice at the time - problem is that what he did (and probably continues to do in his life)is based on his schewed perspective - probably keeps saying "look how successful we were," wonder if he would have been so successful if he had not induced the referrals? Amazing that it took so long for his house of cards to collapse - good luck cleaning up his mess - that was his specialty - creating the mess and then letting others repair the damage....
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