"UW billing scandal: Did dean do enough?"

He got warning before lawsuit

Ramsey found no wrongdoing in ’98 case, no charges brought; 2 doctors object

By Sharon Pian Chan and Steve Miletich
Seattle Times staff reporters

A year before a whistle-blower’s lawsuit sparked a criminal investigation of billing fraud, the dean of the University of Washington medical school received a letter from a doctor pointedly warning him that other physicians were falsifying Medicare bills.

The dean, Paul Ramsey, ordered an investigation and found no wrongdoing, although a written report wasn’t produced at the time.

But the letter, obtained by The Seattle Times, raises questions about when the medical school’s top executive became aware of potential billing fraud and whether he fully addressed it.

Ultimately, the government found evidence of widespread fraud, though it didn’t specifically cite the instances named in the letter. The UW reached an agreement with the U.S. Department of Justice in April to pay a record $35 million penalty for overbilling Medicare and Medicaid.

Disclosure of the April 1998 letter prompted Ramsey to give his first interview on the scandal.

In the interview, Ramsey defended his response to the letter. He described its allegations as groundless and insisted he was never made aware of real billing problems before the whistle-blower brought them to light.

Critics, including two current UW doctors and a former state investigator, disputed Ramsey's claim that the letter was groundless. The doctors said they doubt Ramsey and the medical school went far enough when the letter raised red flags, and they accused administrators of acting only when they were forced to.

Ramsey did admit for the first time the school's culpability in widespread fraud that led to the record penalty and prompted two prominent UW doctors to plead guilty to felony crimes.

He also said that, in light of the painful lessons the university has learned over the past five years, he probably would have done some things differently.

Ramsey acknowledged that complying with Medicare and Medicaid billing rules was not a top priority until the UW came under scrutiny as a result of the whistle-blower's suit and the subsequent criminal probe by federal and state investigators.

"We did not recognize (compliance) at the same level that we do now," he said, although he characterized the vast majority of the billing errors as "unintentional."

In the 1998 letter to Ramsey, anesthesiologist Bruce Spiess alleged that falsification of bills had become the de facto policy in his department and that it constituted fraud. A source gave a copy of the five-page letter to The Seattle Times on the condition of anonymity.

Spiess wrote, "My concern, and the danger I see to the University, is that signing and billing for care or supervision (the doctor) has not actually provided probably constituted Medicare and/or insurance fraud."

Spiess, who was about to leave the UW, said in the letter, "I feel compelled to make you aware of these problems as I cannot with clear conscience move on and leave them unknown to the 'administration.' "

Spiess, now at Virginia Commonwealth University, declined on the advice of his attorney to comment for this story. The medical school paid Spiess $15,000 in 1998 to settle a separate dispute over unpaid hours he had worked; he agreed to keep the settlement confidential, and left the school later that year.

The U.S. Attorney's Office in Seattle, which oversaw the criminal investigation, said it learned of Spiess' allegations during its inquiry. No criminal charges related to the allegations were filed, and a spokeswoman would not say whether the allegations were substantiated.

"We are not in a position to comment on the substance of the issue," said Susan Loitz, assistant U.S. attorney.

 

Spiess' letter to Ramsey addressed the billing issues and his concerns over staffing shortages in the department of cardiothoracic anesthesiology.

Doctors repeatedly asked Spiess to falsify bills, he wrote, regardless of whether he had cared for the patient. Those doctors were not charged in the case. Other doctors were expected to do the same, the letter said.

In one case, Spiess observed a resident perform a liver transplant by himself, after which a doctor who had not been present for the procedure signed as having supervised it.

In another instance, Spiess wrote, he was working on a patient with a ruptured aorta when a doctor asked him to leave the operating room to see to another patient undergoing brain surgery. Spiess said he couldn't leave his patient. The doctor told him he could skip the brain surgery, and if everything went fine, he should sign as if he had cared for the brain-surgery patient. Spiess wrote that he refused.

"This 'false signing' practice has become the policy in the Department. I have observed it occurring on many occasions," he wrote.

Spiess added that he believed his supervising doctor intended to force him out of the school and ruin his academic career.

"The events and practices described above put the University, and most importantly, its patients at risk," Spiess wrote.

Spiess also wrote that his department was so short of doctors it was endangering patients' lives because of the serious nature of the cases treated.

Ramsey's response to the understaffing and billing issues produced different results. He asked a UW lawyer to investigate the understaffing issue. That lawyer then asked the medical director to review the issue, and the two wrote a final report concluding staffing was sufficient.

Ramsey said he asked the business office of the medical school to look into the billing issue. The business office hired an outside law firm, which interviewed Spiess and others and retained a medical expert to review Spiess' allegations, according to documents provided by the school.

The documents show the interviews were limited to a small group of people who were mainly targets of Spiess' letter. They all denied wrongdoing.

The law firm that conducted the investigation, Preston Gates & Ellis, had helped develop the Medicare and Medicaid compliance programs for UW doctors in the early 1980s. The expert hired by the firm to review Spiess' allegations was a former UW medical-school official.

Dan Dubitzky, a special state attorney hired by the UW in the billing case, said he doesn't believe Preston had a conflict of interest, because it was looking into a specific matter and not the overall compliance program it helped create.

Ramsey said he received oral reports in 1998 from the business office, relaying that the law firm had found the allegations groundless.

But a written report wasn't generated until 2002, when the UW was embroiled in the government's criminal investigation. The report's conclusion of no wrongdoing was supported by a respected Seattle lawyer who conducted his own investigation, although he was representing several UW medical-school staff in the billing case at the same time.

Ramsey said that if the allegations had been raised under the tighter compliance programs the UW now has in place, there would have been more internal reviews and a timely written report. But he said he is confident the outcome would have been the same.

Two UW doctors doubted the investigation's findings.

Joe Eskridge, a doctor in the UW neuroradiology and neurosurgery departments, said that given what has happened over the past five years, it was unbelievable that the university didn't find any substance to Spiess' allegations.

"That's ridiculous. That's bogus," he said. "They're lying about that — gotta be."

Warren Guntheroth, a pediatrics professor who has worked at the UW for 47 years, has criticized the university throughout the billing investigation. "I do not trust them in the slightest in terms of what they do in ... investigations and taking appropriate actions.

"They stonewall."

Ramsey, Guntheroth said, "pretty much has a blank check as far as power is concerned. Given that situation, it's a little like the situation in Iraq. Hey, you were in charge, how could you let this happen?"

Curtis Edwards, who worked on the UW case for years as a Medicaid fraud investigator with the state Attorney General's Office, called Spiess "a very ethical man."

Edwards, now retired, also said he "kind of disagreed" with a written statement from the UW saying Spiess's allegations were groundless.

Edwards said he was limited in what he could say because of secrecy rules related to the criminal investigation, although he noted that he didn't think "criminality" could be proven.

Ramsey said he doesn't believe the Spiess inquiry was a whitewash.

"That is absolutely false," Ramsey said. "The culture at the university is one of review, and review again, and review again a third time."

Ramsey also said the UW took an earlier opportunity to examine its compliance programs after the University of Pennsylvania was fined $30 million in 1995 for Medicare fraud. That development was a major bombshell in the academic medical community, indicating the government was taking a harsh new line as a result of federal audits of teaching hospitals around the country.

Ramsey said that examination found the safeguards ordered at Penn were already in place at the UW. Still, the UW began improving its compliance program, spending a few hundred thousand dollars more per year on it.

"In retrospect, we should have spent millions," Ramsey said, noting the UW has done that over the past several years to bolster compliance.

Ramsey also accepted some personal responsibility for the problems at his school.

"We must accept responsibility — and that, of course, includes me — for improving the compliance program, for the fact that too many errors were made," he said.