KDMC settlement pending

April 02--ASHLAND -- Whether King's Daughters Medical Center will pay tens of millions of dollars to settle claims its physicians performed unnecessary heart procedures remains unknown, but what is clear is that the hospital has reserved $48.9 million to pay for a settlement.

Hospital officials disclosed the amount last week to its municipal bondholders and said the money has been set aside for a potential settlement.

The hospital's audit, which was released in March, says King's Daughters has reached a settlement agreement with the U.S. Department of Justice, but a hospital spokesman said Tuesday the audit was improperly worded and no settlement has been reached.

The justice department has been investigating the high number of stent implantations at KDMC, and earlier this year more than 500 sued the hospital and some of its physicians, claiming they were victims of unnecessary and harmful cardiac procedures.

Stents are small mesh cylinders that are inserted into arteries to prevent them from collapsing.

Critics say excessive stenting allows health care providers to bill health insurance companies, federal and state governments and the patients for unnecessary procedures.

The audit report says the hospital "reached an agreement to settle" with the justice department and that terms of the settlement included paying $40.9 million to the United States. The other $8 million is for legal fees and costs.

However, the auditors used the word "settlement" incorrectly, hospital spokesman Tom Dearing said. The correct term would be "potential settlement."

"Auditors don't really distinguish between the two. They just note that we estimated the amount and booked it, as required," Dearing said in a email.

Hospital officials told bondholders King's Daughters and the justice department are in final negotiations and that the reserved settlement amount should be accurate.

Accurately estimating and reserving the settlement amount was the reason behind the hospital's failure to file its annual financial report on time, hospital officials told bondholders.

The justice department investigation has been going on since 2011. It focused on four physicians, two of whom remain at King's Daughters.

Along with the hospital and associated entities, the lawsuits name physician Richard E. Paulus, who retired from KDMC last year after 21 years there and after whom the hospital's heart and vascular center is named.

MIKE JAMES can be reached at [email protected] or (606) 326-2652.

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