Bermuda Blames Its Costly Most-Scanned Status on Vast Conspiracy

(Bloomberg) -- Bermuda filed a lawsuit in federal court in Boston accusing a U.S. hospital group of bribing the island’s former premiere and taking part in a conspiracy resulting in costly and unnecessary medical-imaging tests.

The 20-year relationship between the Lahey Hospital & Medical Center and Dr. Ewart F. Brown, who previously led the island’s government and owns two private clinics, turned Bermudians into “among the most scanned patients in the world,” paying for nearly twice as many of the tests as nations with comparable populations, said the lawsuit. Bermuda’s public health insurers paid Lahey more that $40 million from 2006-2016 for care provided in Massachusetts, according to the 54-page lawsuit filed on behalf of the island government by attorneys from the Boston law firm of Cooley LLP.

The Massachusetts-based hospital defended its track record of providing care to patients in Bermuda for the past 25 years and issued a statement calling Lahey’s business practices “beyond reproach.”

“Any allegation of impropriety by Lahey Hospital & Medical Center is baseless and without merit,” spokesman Chris Murphy said, noting the hospital had just received the lawsuit.

Island Affairs

Brown was a longtime member of Parliament and the island’s leader of government from 2006 until his retirement in 2010. Police raided his clinics on Feb. 11.

In a statement Feb. 13 following police seizure of clinic records, Brown denied wrongdoing and accused police of violating his patients’ privacy and breaking windows to enter his company.

“I am offended, saddened, dismayed and alarmed, but not surprised,” Brown said. “We will fight with our last cent and to our final breath."

Brown couldn’t be immediately reached for further comment.

Fee Review

The government claims Lahey’s relationship with Brown began in 1997 when he was the island’s minister for human affairs. The hospital bribed Brown through consulting fees beginning in 2001, when he was paid at least $125,000, according to the complaint. His fees steadily increased, according to the complaint. In 2008, the clinic agreed to pay him fees of $504,000, according to e-mails obtained by the government.

In return, Bermuda contends, Lahey received preferential treatment in winning government health-care contracts and became the top foreign provider of health-care services.

In addition, the hospital made millions by having staff in Massachusetts interpret MRI and CT scans performed at Brown’s clinics, the government claims. Scans for patients insured through Bermuda’s public-health plans allegedly tripled from 2009 to 2010 alone, the government said.

‘Wildly Successful’

“The enterprise was wildly successful and resulted in the enrichment of both Lahey and Brown at the expense of the Bermudian Government and people,” according to the complaint.

Brown, a former Los Angeles doctor who was first elected to Bermuda’s Parliament in 1993, used his profits to buy a home in Oak Bluffs on Martha’s Vineyard, apartments in New York and properties in Turks and Caicos, the government said.

Lahey, which changed its name from Lahey Clinic and operates four hospitals, is also a teaching hospital for Tufts University School of Medicine. Lahey Health announced in January it is in talks to merge with Beth Israel Deaconess Medical Center in Boston.

The case is Bermuda v. Lahey Clinic, 17-cv-10242, U.S. District Court, Massachusetts (Boston).

To contact the reporter on this story: Janelle Lawrence in Boston at jlawrence62@bloomberg.net.

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Paul Cox, Andrew Martin