The following FAQ covers basic questions related to the Department of Justice’s decision to intervene in a lawsuit concerning an affiliation between Memphis Le Bonheur Healthcare and West Clinic.
1. What is this case about?
The lawsuit is seeking to portray customary and legal business arrangements between MLH and West Clinic physicians as illegal activities. In effect, the suit would penalize the hospital for forging a successful partnership with West Clinic that did exactly what it was intended to do: create an integrated cancer diagnosis, treatment and surgical service that improved cancer care and led to better patient outcomes for the Memphis community.
Background: In 2011, Methodist Le Bonheur Healthcare (“MLH”) entered into a seven-year affiliation with The West Clinic, an oncology practice group, to perform clinical cancer care, management services, academic training and research services.
MLH compensated West Clinic for the clinical services its physicians provided and for managing the hospital’s oncology program, according to business terms developed with the advice of consultants and lawyers for both parties. Such arrangements are common; many health care systems around the country have entered into similar agreements with medical specialty practices.
In 2017, a former president of one of MLH’s hospitals and a former executive dean at the University of Tennessee Health Science Center sued MLH and two former hospital executives, alleging that payments to the doctors exceeded fair market value for their services. The suit further claimed the payments were intended to induce the doctors to refer more patients to the hospital, in violation of federal laws related to Medicare and Medicaid reimbursements.
On October 8, 2021, the Justice Department (“DOJ”) filed a motion to intervene in the qui tam lawsuit, despite previously declining to intervene in September 2019. The court granted the motion, and the government will now take over the case from the plaintiffs and press the case forward.
As we said when the litigation began: We uphold the highest standards and comply with all legal and regulatory requirements. MLH entered into the arrangement to elevate cancer care in its community. MLH’s professional agreements with West Clinic provided needed medical services for cancer patients and our payments for those services were appropriate.
We cooperated fully with the Justice Department’s investigation of the allegations in the suit as it was deciding whether to intervene in 2018 and 2019. And we are confident that a balanced and accurate assessment of our affiliation with West Clinic will present an entirely different picture than the one alleged in the suit and now led by the Justice Department, which is why we believe the claims are without merit and why we will vigorously defend ourselves.
2. Why did the DoJ decide to intervene in case after initially declining to do so?
The hospital’s lawyers are seeking to learn more about the DOJ’s reasoning, but nothing has changed about the case since the initial decision not to intervene. This case has nothing to do with patient care; there are no allegations about the cancer care received by any patient. What this case boils down to is a dispute over the appropriate level of payments MLH made to West Clinic for the services provided by its physicians.
There was no attempt to generate more patient referrals through excessive physician compensation – the suit amounts to after-the-fact second guessing of a compensation structure that outside respected experts determined reflected fair market value for such services.
3. What happens next?
After getting the court’s approval to intervene in the case, the government has now filed its official complaint. The lawsuit will follow the typical litigation process, which includes responding to the complaint, obtaining discovery, and filing other motions before U.S. District Court judge presiding over the matter.
4. How long will it take to resolve the case? Will the hospital settle?
It is too early to determine how long the case will last, but we believe the allegations are without merit and will vigorously defend against them.
5. The original plaintiffs were former senior executives at MLH and UT’s Health Science Center. Why would they make such allegations against MLH and West Clinic?
We cannot speak to their motivations, but their allegations are without merit.
6. If that’s so, why did West Clinic agree to settle with the original plaintiffs?
We respect West Clinic’s decision. At the time, West said it had decided to settle to avoid the cost of protracted litigation. There was no admission of liability as part of the settlement.
7. The suit claims that MLH overpaid West Clinic physicians in several ways, including inflating the standard metric used to set compensation, using funds from a drug discount program and paying for management services that were never performed – are these claims true?
The compensation structure under the affiliation with West Clinic was well within acceptable parameters and developed with the advice of outside respected experts and consultants for both parties.
As a hospital that provides extensive care to underserved populations, MLH is eligible for the federal 340B Drug Discount Program, which enables MLH to provide more treatment to more needy patients, which is how the hospital has always utilized and continues to utilize the program. The savings from this program enabled the hospital to increase spending on oncology care for indigent and uninsured patients from $3.2 million in 2011 when the affiliation began to $20.3 million by 2017. The savings also enabled the funding to expand cancer care services.
MLH received every service due under the management services agreement.
8. Why did MLH enter into the affiliation with West Clinic?
As a mission-driven, not-for-profit, faith-based health system serving the Memphis community for over 100 years, Methodist Le Bonheur Healthcare (MLH) has provided care of the highest quality to anyone who comes through our doors, regardless of their ability to pay.
Building on that legacy, in 2011, MLH entered into a seven-year affiliation with West Clinic to perform clinical cancer care, management services, academic training and research services. The resulting West Cancer Center succeeded in achieving superior cancer care and easing cancer treatment disparities in the mid-south community.
9. What other results did the partnership achieve?
The MLH-West Clinic affiliation led to an array of positive outcomes, including:
- An increase in the number of patients screened for clinical trials and receiving genetic and molecular testing and palliative and hospice care.
- Reductions in cancer-related hospital admissions, re-admissions, emergency room visits and admissions, surgical-site infections, central-line infections and post-op infection rates.
- Meeting or exceeding national benchmarks for medical oncology, gynecologic oncology, transplants, and radiation oncology.
- Improved long-term breast, lung, uterine and colon cancer survival outcomes.
The success of the affiliation also led to significant investments in health care for the Memphis community, including $138 million for uncompensated care and the creation of a Stem Cell Transplant Program that by 2018 had increased the number of patients treated to more than 100 a year from 10-12 a year before the affiliation. The program enabled patients to stay in Memphis for treatment and ranked in the top 10% for survival rates in the nation.
Other investments included hiring more full-time employees who have served as patient navigators and helped reduce barriers to cancer care, as well as nutritionists, geneticists, and spiritual counselors.
10. Why didn’t MLH and West extend their partnership when the seven years ended?
After the original term expired, the partnership came to a natural end and the parties decided to go in different directions. We are proud of what we accomplished through our affiliation with West Clinic. We set ambitious treatment goals for the partnership and met them. MLH will continue to enhance our cancer care services, as we pursue our mission to serve our patients and our community by providing them with the best health care possible.