Chesapeake (Va.) Regional Medical Center has been indicted for allegations of healthcare fraud, among other claims, in a "rare move" that holds a hospital criminally liable for a physician's misconduct, WilmerHale attorneys wrote in an article published by JDSupra on Jan. 30.
The indictment accuses the hospital of allowing Javaid Perwaiz, MD, to perform unnecessary procedures and submitting fraudulent claims for reimbursements to Medicare, Medicaid and private insurers. Chesapeake Regional Medical Center, formerly known as Chesapeake Regional Hospital, pleaded not guilty Jan. 28 to allegations of healthcare fraud, conspiracy to defraud the U.S, and obstruction of government operations.
"As we have maintained from the outset, the government's case is unfounded and an excessive overreach and we are confident we will prevail in court," a hospital spokesperson said in a statement to Becker's Jan. 30.
Here are eight things to know about the case:
1. According to the WilmerHale article, this case is one of the few instances in which the Justice Department has pursued criminal charges against a hospital for fraud linked to a physician's misconduct. Typically, hospitals face civil liability in fraud cases, making this criminal prosecution an escalation in healthcare fraud enforcement.
2. The indictment alleges that from 2010 to 2019, the hospital knowingly allowed Dr. Perwaiz to perform medically unnecessary surgeries and submit false insurance claims. The hospital allegedly ignored red flags spanning decades, including a prior termination from another hospital and his felony tax fraud conviction.
3. The indictment further alleges that CRMC submitted its own false claims for procedures it knew were improperly billed. Additionally, hospital employees repeatedly raised concerns about Dr. Perwaiz's billing practices and medical necessity of procedures, but CRMC continued to recredential him.
4. According to the article, independent post-arrest reviews by health insurers found that 80% of Dr. Perwaiz's surgeries between 2015 and 2019 were unnecessary. CRMC's internal audit revealed that many sterilization procedures lacked valid patient consent.
5. The indictment also alleges that Dr. Perwaiz routinely falsified patient records to schedule early elective labor inductions, ensuring he could deliver babies on his preferred schedule.
6. In pleading not guilty, CRMC has argued that it is an "arm of the Commonwealth" of Virginia and therefore immune from federal prosecution. If this defense succeeds, it could set a precedent limiting federal criminal liability for certain hospitals, WilmerHale attorneys wrote.
7. According to the article, this indictment aligns with the Justice Department's broader crackdown on healthcare fraud.
"Hospitals and other large healthcare providers are expected to have compliance programs in place to detect and swiftly respond to illegal conduct by doctors, particularly those with surgical privileges," according to the WilmerHale attorneys. "To promote detection and response, hospitals and other large healthcare providers should maintain strong internal reporting mechanisms that encourage employees to report alleged wrongdoing, including anonymously."
8. The case underscores the importance of internal compliance programs, encouraging anonymous reporting and proactive investigations, according to the article. Hospitals that fail to act on known misconduct may face criminal prosecution, making self-disclosure and internal monitoring key to mitigating risk.
According to the WilmerHale attorneys, with the Justice Department intensifying scrutiny on healthcare fraud, hospitals can no longer afford to ignore misconduct by their physicians.