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Lahey Clinic lawsuit dismissed by US court

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Case closed: Attorney-General Kathy Lynn Simmons (Photograph by Paul Johnston)

A United States judge has dismissed a case against American-based medical group Lahey that alleged it conspired with Ewart Brown, a former premier, to defraud the island of millions of dollars in healthcare charges.

Kathy Lynn Simmons, the Attorney-General, said yesterday: “From our perspective, the case is closed, and we do not intend to pursue it any further.”

She was speaking after Judge Indira Talwani of the US District Court in Massachusetts allowed Lahey’s motion to dismiss the case.

Ms Simmons added the ruling, made on Thursday, was “exactly what I had anticipated from the beginning”.

She said that the Government pursued the case “given the politically charged nature” of the action and that it was important that the decision came from “an independent assessor”.

Ms Simmons added the cost of the case had not been assessed, but that it had run up a bill of “well over $1 million”.

Trevor Moniz, Shadow Attorney-General, said that Judge Talwani had signalled that criminal charges could still be brought in America.

He added: “She pointedly noted that American institutions such as Johns Hopkins may have a valid domestic injury claim against Lahey within the US.”

Judge Talwani said in her decision that a claim under the federal American Racketeer Influenced and Corrupt Organisations Act could not be considered because Bermuda had suffered no loss in the US.

Judge Talwani said in her ruling: “Bermuda has not shown that it suffered any injuries in the United States as a result of the alleged scanning scheme.

“Without such an injury, Bermuda’s Rico claims as to the scanning scheme arise out of extraterritorial injuries and must be dismissed.”

Another claim for damages over the FutureCare insurance plan was also dismissed because it was nothing to do with the US.

Judge Talwani said: “The Kurron Bermuda project involved developing the ‘FutureCare’ public insurance plan.

“Bermuda alleges that ‘Brown used his influence and connections to ensure that Lahey was favoured over other potential US healthcare providers, including Johns Hopkins, for lucrative contracts relating to ‘FutureCare’.”

But she added: “As FutureCare is a Bermudian public insurer which reimburses healthcare costs of Bermudian residents, the court cannot, without more, find any injury from these contracts to business or property in the United States.

“While entities like Johns Hopkins, whose domestic profits were competitively injured by

such contracts, might have a valid domestic injury claim, Bermuda does not.”

The judge added: “The question presented in this case is whether Bermuda may bring an action for the various injuries alleged under Rico’s private right of action.

“It may well be that Bermuda’s allegations as to Lahey’s commission of various predicate acts would suffice for criminal charges ... or civil enforcement proceedings brought by the Attorney-General ... however, the focus of this motion is whether Bermuda, as a private party, may bring these charges ...

“That depends on whether Bermuda has alleged domestic injuries to business or property caused by Lahey’s conduct.

“The injuries in this case are assessed in turn.”

Judge Talwani added: “Bermuda also brings claims under Massachusetts General Laws c. 93A, § 11 for unfair business practices and common-law claims under theories of unjust enrichment, civil conspiracy, and fraud.

“Given the early stage of this litigation and the fact that the parties have not yet begun the arduous task of discovery, retaining jurisdiction over Bermuda’s pendent state law claims would not serve such interests. Accordingly, Bermuda’s state-law claims are dismissed without prejudice.”

The case, started under the former One Bermuda Alliance government, claimed Dr Brown, the owner of Bermuda Healthcare Services and the Brown-Darrell Clinic, used his position as a government minister to promote Lahey’s interests in Bermuda and the hospital paid him “bribes disguised as consulting fees”.

It was alleged the arrangement led to Lahey gaining contracts with King Edward VII Memorial Hospital and to it becoming the “service provider of choice for Bermudians, both on the island and in the United States”.

The civil suit also claimed Dr Brown’s clinics in Paget and Smith’s conducted “excessive, medically unnecessary and frankly dangerous scans” in order to increase payments received from health insurers.

The claim also alleged that Dr Brown paid Lahey a portion of the reimbursement for reading each scan, making the hospital millions of dollars and that Lahey “stayed silent” about the “extreme level of unnecessary and possibly dangerous scans” because it was “blinded by its desire to keep its ‘consulting’ relationship with Dr Brown intact”.

Other allegations included that Dr Brown and his “surrogates” successfully pressured government officials to increase the remuneration paid for tests and that he “offered and paid kickbacks” to island doctors, disguised as commissions, to refer patients for scans to his clinics.

The government submission to the court said that the level of testing conducted at Dr Brown’s clinics made Bermudians “among the most scanned patients in the world”.

To read the Attorney-General’s remarks in full and the judge ruling, click on the PDF links under “Related Media”.

It is The Royal Gazette’s policy not to allow comments on stories regarding court cases. As we are legally liable for any libellous or defamatory comments made on our website, this move is for our protection as well as that of our readers.

Ewart Brown, the former premier (File photograph by Blaire Simmons)