April 27, 2021, Legal Intelligencer article by Lamb McErlane PC Health Law Attorneys Vasilios J. Kalogredis and Rachel E. (Lusk) Klebanoff.

Two Detroit-area cardiologists have been awarded more than $10 million after a federal judge upheld an arbitrator’s decision that Detroit Medical Center (“DMC”) and its parent company, Dallas-based Tenet Healthcare Corporation (“Tenent”), acted with malice in firing them as retaliation for reporting violations at the facility. The arbitrator also reinstated both doctors’ medical staff privileges at three DMC hospitals for at least a one-year period.

Amir Kaki, M.D. and Mahir Elder, M.D. were medical leaders and top admitters and proceduralists for patients with heart problems when they were fired from DMC on October 1, 2018. They subsequently filed suit in the U.S. District Court in Detroit, alleging they reported to DMC executives multiple problems of dirty instruments, unnecessary procedures on patients performed by other doctors, lack of nursing staff, cutbacks of critical lab and support services, and failure of top DMC and Tenet executives to investigate alleged incidents of Medicare and Medicaid fraud.

According to the 41-page complaint, Elder’s and Kaki’s quality and fraud complaints were ignored by DMC executives, they were fired from their administrative duties, barred from serving on hospital quality-of-care committees, and publicly disparaged by top DMC executives. Both doctors’ medical staff privileges at all system medical centers were also discontinued.

For example, Kaki and Elder reported that physicians found supposedly sterilized surgical instrument packages containing unsterile, dirty instruments, some with visible tissue and blood. The last time problems were reported was one month before they were terminated.

The lawsuit also described several instances of how DMC cost-cutting led to quality of care problems and at least one potential patient death and an unsafe environment for patients. The lawsuit further stated that in early 2018, DMC removed the “stat blood lab from the cardiac catheterization unit at Harper Hospital” as a cost-cutting measure. However, this created “an immediate and serious patient safety issue, as time is of the essence in receiving blood work results for cardiac patients…One patient died because his high potassium levels were not reported to the cardiac team for hours.” The medical device was eventually returned.

Because of prior reports on a number of problems at DMC, including continuing complaints of dirty surgical instruments at Detroit Receiving Hospital and Harper University Hospital, state and federal quality inspectors visited DMC after Elder and Kaki were terminated and confirmed multiple quality of care and patient safety problems. As a result, DMC is now subject to unannounced inspections by the Michigan Department of Licensing and Regulatory Affairs for an indefinite period of time.

The cardiologists’ False Claims lawsuit against Tenet isn’t a one-off. Tenet has been under federal investigation since at least 2005 when it paid $43 million in 2012 to resolve allegations for overbilling in its Atlanta hospitals from 2005 to 2007. In 2006, the Dallas-based company agreed to pay $725 million to settle allegations of illegal Medicare payments to Tenet hospitals in Los Angeles, San Francisco, St. Louis, New Orleans, Memphis and El Paso.

In 2016, Tenet paid a $514 million fine for improperly paying doctors to refer Medicaid patients under a kickback scheme for obstetric and other medical services in Georgia and South Carolina.

Despite already having paid over $1.2 billon over the past 15 years for its improper billing practices, Elder and Kaki’s lawsuit claimed that DMC and Tenent:

• Billed Medicare and Medicaid for procedures knowing that the surgical equipment used in many procedures were not sterile;
• Submitted claims for payments to Medicare and Medicaid that were false or fraudulent;
• Allowed physicians to conduct medically unnecessary procedures; and
• Put patients at risk of contracting life-threatening diseases that include HIV, hepatitis B and C, fungal infections, pneumonia, and other infections.

According to the lawsuit, Kaki and Elder’s reporting of these quality violations and false claims to Tenet officials culminated in their terminations. The complaint further alleged “after (Kaki and Elder) were terminated … (DMC and Tenet officials) falsely made representations to the public that their facilities and instruments were sterile.”

The arbitrator’s award, which includes $4.6 million in back pay, front pay, $624,000 in attorney fees, and an additional $110,000 as sanctions for Tenet’s “discovery abuses” during the legal proceedings, was made public when it was upheld in federal court in February 2021.

In her final ruling, arbitrator Mary Beth Kelly wrote, “Both Kaki and Elder testified credibility regarding the humiliation, the emotional distress and the reputational damage they have suffered to their national reputations.”

Tenet argued that the arbitrator had exceeded her authority.  But the district court disagreed, saying the defendants failed to prove that the award flies “in the face of clearly established legal precedent.” The defendants “not only attempt to relitigate the legal issues but also endeavor to introduce a factual counternarrative unmoored from the findings of the arbitrator and including evidence which the Arbitrator specifically found inadmissible,” the district court said in confirming the award and refusing to seal it.

Tenent subsequently filed an appeal of the ruling in the United States Court of Appeals for the Sixth Circuit, which has already been partially upheld by the Circuit Court. Specifically, the Sixth Circuit Court of Appeals denied Tenent’s motion to bar Elder and Kaki from returning to work with full privileges, but said it would continue to consider the overall appeal. Tenent argued that it needed to keep the cardiologists out of DMC because “behavioral issues.” As of the end of March, only Kaki has returned to work.

Although this was a Michigan matter, we wanted to share it.  We represent physicians.  We recognize how difficult it can be to fight and win on matters like this one against hospitals and those affiliated with them.  What this case illustrates is that, if the facts and circumstances are right, doctors can win.  But, it can take a lot of time, money and emotional distress to get there.

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Vasilios J. (Bill) Kalogredis, Esq. has been advising physicians, dentists, and other health care professionals and their businesses as to contractual, regulatory and transactional matters for over 45 years. He is Chairman of Lamb McErlane PC’s Health Law Department. bkalogredis@lambmcerlane.com. 610-701-4402.

Rachel E. (Lusk) Klebanoff, Esq. is a senior associate at Lamb McErlane PC who focuses on health law and health care litigation. She represents physicians, dentists, medical group practices, and other health-related entities in transactional, regulatory, and compliance matters. rlusk@lambmcerlane.com. 610-701-4416.