The cardiologist who recently blew the whistle on an alleged $521 million fraud at a subsidiary of Infirmary Health Systems was also a plaintiff in a previous lawsuit filed under the False Claims Act, according to records. But it appears Dr. Christian Heesch abandoned the effort after the federal government indicated it would not join the case and threatened to prematurely unseal the complaint because the plaintiffs were not meeting deadlines to provide information.

Instead Heesch moved to dismiss the case and later joined at least one other cardiologist in a separate lawsuit against Verde Valley Medical Center (VVMC) and its related organizations in northern Arizona, claiming violations of federal and state antitrust statutes, defamation and injurious falsehood.

According to the complaint in the antitrust lawsuit, Heesch was hired in late 2001 by a Dr. Nitin Patel, the operator of Cardiac Care, P.C., to gain clinical privileges at VVMC in Cottonwood, Ariz., so Patel could refer patients locally, rather than send them 100 miles down the road to Phoenix. But less than three weeks after receiving temporary privileges to provide cardiac catheterizations at VVMC, Heesch’s privileges were revoked by the hospital’s president while its executive committee recommended his permanent application be denied, according to court records.

In professional complaints against Heesch upheld through a nine-month, independent appeals process, a review committee determined Heesch had performed medical services outside his approved scope of privileges, had demonstrated “disruptive behavior” with hospital staff and had also failed to disclose in his application that “his ability to practice at the University of Pittsburgh Medical Center and the VA Hospital was restricted.”

Still, VVMC offered Heesch a path to clinical privileges, but only if he would sign a consent agreement that acknowledged the infractions, subjected him to rigorous professional scrutiny, entered him into counseling for interpersonal skills and required him to write a letter to staff admitting that he had made “untrue” and “demeaning” statements and that he “exercised poor judgment in making these statements.” Heesch declined and in December 2002 the VVMC board officially denied his clinical privileges.

The next year, he accepted a position at Diagnostic Physicians Group in Mobile, but it wasn’t until February 2005 that Heesch filed a complaint under the False Claims Act alleging VVMC engaged “in a scheme to defraud the Government…through a series of distinct but interrelated actions” including the “arbitrary referral and privilege stands to minimize competition, the provision of medically unreasonable and unnecessary services, the unbundling of interventional radiological procedures, and the provision of a higher level of medical treatment and services than warranted by the patient condition.”

The False Claims Act (FCA) lays the groundwork for the government to recover funds from any person who “knowingly submits a false claim to the government or causes another to submit a false claim to the government or knowingly makes a false record or statement to get a false claim paid by the government.” Under the act’s qui tam provision, private persons who file suit for violations of the FCA on behalf of the government are eligible to receive between 15 percent and 30 percent of any recovered funds.

Lawsuits filed under qui tam provisions of the FCA remain under seal for 60 days at the discretion of the government, which independently reviews the complaints and has an option to extend the seal while determining whether to take over the civil action. The original plaintiffs, known as relators, may be expected to assist the government with its initial investigation.

In the Arizona case, records indicate the government was contemplating an intervention, but was hampered by the “relators’ delay in providing critical information and/or documents.” In the interim, Heesch and Patel filed the separate suit against VVMC under the antitrust acts and shortly thereafter filed a motion to both dismiss the FCA lawsuit and keep it under seal.

In response, the Justice Department argued the relators did not follow FCA protocol in notifying the government about their intent to dismiss and noted there are few provisions, which can keep a FCA complaint under permanent seal. In June 2006, with the government showing no indication it would intervene, a judge granted the dismissal but also lifted the seal.

Meanwhile the antitrust lawsuit remained, with a core complaint VVMC engaged “in a variety of anticompetitive tactics in a scheme to illegally eliminate all competition for inpatient and outpatient cardiology facilities in the market, and to illegally boycott cardiologists who do not exclusively utilize Defendants’ cardiology facilities.”

That case languished in court until 2009, when an amicable settlement was reached both dismissing the antitrust claims against the medical center and restoring the professional reputation of Dr. Heesch. In January 2011, Heesch filed the sweeping FCA complaint against Infirmary Health System’s Diagnostic Physicians Group, which the government unsealed last month after deciding to intervene.

Portions of the statement of facts from Heesch’s 2005 False Claims Act lawsuit in Arizona read almost identically to those filed against his employer in Mobile six years later. Both complaints suggest Heesch’s fellow physicians were rewarding each other with illegal kickbacks for exclusive referrals, thereby defrauding Medicare and other federal healthcare programs.

While the local complaint identifies the total false claims amount by Diagnostic Physicians Group as $521,600,599, the FCA provides for punitive damages three times that amount, plus penalties of between $5,000 and $10,000 for each claim falsified. A settlement could result in softer penalties, but in successful FCA cases in which the government intervenes, the relator is awarded between 25 percent and 30 percent.

In a statement, Infirmary Health Systems CEO Mark Nix said the allegations were “unfounded” and said the lawsuit would be “vigorously defended.”

“We have been working with the government for over a year to respond to their questions and are very disappointed to see them now intervening in this claim, which we view as without merit,” Nix said. “We believe the [DPG] Clinic has provided services and compensated its physicians in full accordance with the law and that the Clinic acted in the best clinical interest of our patients.”

Christ Coumanis, Heesch’s attorney in the case against Diagnostic Physicians Group, said Heesch’s previous lawsuit naming defendants in Arizona is “not in any way related” to his lawsuit in Mobile.

“The best way to put it is, say someone is involved in car accident where they are struck from behind and injured so they file a personal injury lawsuit,” he said. “Ten or 15 years later, they are on the operating table and a surgeon might be operating on the same body part, but they cause a separate injury so they sue for malpractice. It’s not the same thing. That plaintiff can’t be fairly characterized as litigious.”

In accordance with the FCA, the court can restrict Heesch’s participation in the case against Diagnostic Physicians Group, which would also limit or obstruct the defendants’ ability to file counterclaims against their former employee, including any evidence regarding his previous claims against medical facilities in Arizona or elsewhere. Diagnostic Physicians Group has been given until Aug. 8 to respond to the complaint in court.