Included in the settlement, which was announced Tuesday by the Maryland U.S. attorney's office, is the repayment of federal funds that St. Joseph received for "medically unnecessary" coronary stents placed by Midei after he had left MidAtlantic to become a full-time St. Joseph employee with a seven-figure salary.
St. Joseph also "submitted false claims for medically unnecessary stent procedures performed by Dr. Mark Midei," the document states.
"Kickbacks give doctors an incentive to pursue unnecessary treatments that are costly and sometimes even dangerous to patients," Rod J. Rosenstein, U. S. attorney for the District of Maryland, said in a statement. His office declined to say how much of the settlement relates to unnecessary stent procedures.
More than 100 patients have filed malpractice claims against the hospital and Midei, who was removed from duty in May 2009 under suspicion that he had falsified patient records to justify unneeded stent procedures. A physician oversight board has since filed charges against him, and could restrict or remove his medical license.
Midei filed a lawsuit against St. Joseph last month, claiming that officials there ruined his reputation by warning nearly 600 patients about his work. He has denied all allegations against him.
His attorney, Stephen L. Snyder, said Tuesday that the settlement says nothing about his client.
"This is a recognition that St. Joe acted improperly … it has no acknowledgement as to Dr. Midei," Snyder said, adding that he believes Midei was set up to avoid a larger fine.
To reduce "the magnitude of the penalty, these two entities threw Midei under the bus because he was the guy doing the most stents," Snyder said. "But he also was the most competent and he did the most difficult ones."
Stents are used to prop open blocked arteries and improve blood flow, and Midei is considered by those in his field to be exceptionally skilled at placing them. St. Joseph recruited him from MidAtlantic based on his performance in January 2008, though the hospital had already worked with him for years on a contract basis.
The kickback and unnecessary-procedure claims came to light through the efforts of three whistle-blower doctors who have spent the past four years working with the government, according to their Baltimore attorney, J. Stephen Simms.
Drs. Peter Horneffer, Stephen Lincoln and Garth McDonald were employed by Cardiac Surgery Associates, which filed a lawsuit that's still in court against MidAtlantic in 2001 alleging that the business steered patients away from CSA surgeons.
In 2005, a Baltimore County jury found in a separate civil case that two MidAtlantic doctors, including Midei, had done just that, fraudulently sending a man away from his CSA surgeon to another physician employed by MidAtlantic. The jury levied a $5 million judgment against MidAtlantic in that case, which has since been reopened.
Through the lawsuits, the doctors learned of the alleged kickback situation, which they say further squeezed CSA surgeons, and began working with federal investigators, Simms said.
Simms raised questions about the level of care St. Joseph patients received.
"When there are kickbacks, the patient isn't referred based on the quality of the physician; the referral is based on the amount of the kickback," Simms said.
In a statement, Daniel R. Levinson, inspector general of the Department of Health and Human Services, said, "Payoffs to influence health care decision-making too often result in inappropriate, unnecessary and harmful medical practices."
He added that "OIG is committed to protecting patients from needless medical procedures, such as the insertion of unnecessary cardiac stents — as is alleged in this case."