The Lahey Clinic is the target of a federal lawsuit filed Tuesday by the government of Bermuda, which is accusing the Burlington hospital of bribing the island’s former leader in order to secure health care business there.
The lawsuit, which ensnares Lahey in Bermuda’s ongoing political tumult, asserts that the hospital and Ewart Brown, a doctor who was Bermuda’s premier from 2006 to 2010, were part of a sweeping racketeering conspiracy that spanned 20 years and involved money laundering, mail fraud, and corruption.
The suit alleges that in return for bribes, which were disguised as consulting fees, Brown directed a huge share of the island’s health care business to Lahey, including lucrative contracts to interpret thousands of MRIs and CT scans performed at two clinics owned by Brown. At one point, the suit states, the fees totaled more annually than Brown earned as premier.
Brown’s clinics were raided by Bermuda police last weekend, according to local published reports.
As a result of the arrangement, according to the suit against Lahey, thousands of medically unnecessary scans allegedly were performed, making Bermuda among the highest users of MRI and CT scans in the world. The lawsuit did not provide direct evidence either for the claim that the scans numbered among the highest or that they were unneeded.
Lahey, which has yet to review the lawsuit, filed late Tuesday, said any allegations of impropriety by the hospital are “baseless and without merit.”
“We have a 25-year track record of providing the highest-quality care to our patients in Bermuda, and our business practices are beyond reproach,” Lahey said in a statement, adding that it provides high quality care in Bermuda at a lower cost than other international health care providers.
“We will review these allegations and vigorously defend ourselves through every step of the legal process,” Lahey said.
The suit alleges that since 2001, the respected Burlington hospital paid Brown hundreds of thousands of dollars a year in consulting fees, awarding him substantial increases. The suit notes that Brown and his wife bought a $3 million house in Oak Bluffs on Martha’s Vineyard.
The government says Brown “ensured that Lahey became the overseas health care provider of choice for Bermudians,’’ secured a prestigious board appointment for Lahey at the country’s state-run hospital, and lobbied for fee increases for diagnostic tests performed in Bermuda that Lahey interpreted remotely in Massachusetts.
Brown collected fees from insurers for scans done at two clinics he owns and split the money with Lahey to read the results, the suit states. Separately, from 2006 to 2016, the lawsuit says that government-funded health plans for seniors and other covered individuals paid Lahey more than $40 million for specialty care provided to Bermuda residents in Massachusetts.
While unproven, the allegations thrust Lahey into the middle of a political battle in this tiny British territory of 65,000 people off the coast of North Carolina.
According to Bermuda news reports, Brown has been under investigation for allegations of political corruption for years. On Saturday and Sunday, police raided the two medical clinics, Bermuda HealthCare Services and Brown-Darrell Clinic, taking boxes of records as part of an ongoing investigation, according to an article Monday in The Royal Gazette newspaper.
The Bermuda Police Service warrant cited reasonable grounds to suspect “corrupt practices and conspiracy to defraud,” the paper reported.
Brown has denied wrongdoing and accused police of launching a politically motivated investigation of him that has dragged on for years, according to media reports. Brown, who is black, said attacks against him and his family have been in part racially motivated.
He said he was “offended, saddened, dismayed, and alarmed, but not surprised” by the police searches of his clinics, which upset staff and patients. The Globe’s attempts to reach Brown were unsuccessful.
The government of Bermuda is seeking to recover unspecified damages from Lahey.
Brian T. Kelly, a partner at Nixon Peabody and a former federal prosecutor, said “civil racketeering actions are fairly common, but what makes this unusual is that it’s a foreign government bringing the case and alleging corruption by one of its own former members.”
He noted that civil racketeering charges are easier to prove than criminal racketeering charges because there is a lesser standard of proof. Jurors must find charges are proved by a preponderance of the evidence, rather than beyond a reasonable doubt.
E-mail exchanges between Lahey executives and Brown recounted in the lawsuit also provide a rare glimpse into the hyper-competitive overseas market for US hospitals, as Lahey vied for position to treat Bermudian patients on the island, when they travel to Massachusetts, and remotely by teleconference. Bermuda, like the Middle East and more recently China, has been a focus for American health care companies trying to expand their market in part because of its proximity.
In a December 2014 hospital newsletter, Lahey boasted about its 20-year relationship with Bermuda — a connection it said began when Brown approached Lahey about providing specialty care on the island. The relationship grew friendly, according to e-mails described in the suit.
In a November 2007 e-mail from Lynn Malloy Stofer, then chief operating officer at Lahey, she mentions the Bermuda elections planned for the following Dec. 18, the communications described in the lawsuit say. “I only wish we could vote,’’ she writes. “Is there anything we might do to help?? — just ask.’’
The following July, Malloy Stofer e-mailed Brown that Lahey was increasing his consultant fees by 9 percent, retroactive by seven months, according to the suit. The agreement was for $504,000, meaning $42,000 a month, the suit says.
But at other times, Lahey was upset about other hospitals’ gaining footholds in the country. Stofer e-mailed Brown in August 2008 about an announcement that Dana-Farber Cancer Institute in Boston had reached an agreement with King Edward Memorial Hospital, the state-run facility, to provide oncology care to patients.
She wanted a similar announcement about the hospital’s relationship with Lahey. “I remain concerned for those patients on the island who have continued to receive their care from Lahey Clinic Physicians,’’ she writes. “This would trouble me as a patient if I were to read this and had former care at Lahey. It would also confuse me.’’
Brown responded to Stofer later that day, saying he thought she knew the announcement was coming and that he would have another doctor reach out to her.
The suit also says that Brown failed to disclose the payments from Lahey, as required on annual reports filed by members of Parliament.
In addition, according to the suit, Lahey donated $10,000 to Brown’s “Premier Gala,” a political fund-raiser held shortly after he took over the country’s top post.
The Bermuda government hired the Boston law firm Cooley LLP to represent it in court. “Over the years, Lahey has made no secret of its desire to expand,’’ said lead attorney Luke Cadigan. “In this case, it was willing to make payments to a foreign government official to help it do so.”
Trevor Moniz, Bermuda’s attorney general, provided a written statement to a Boston public relations firm, Liberty Square Group, working with Cooley. It said in part that the arrangement between Brown and Lahey “has severely harmed Bermudians, who have been denied honest competition for health care services and forced to pay millions of dollars in increased healthcare costs. They have also been subject to the costs and health risks of medically unnecessary CT and MRI scans, which have nearly doubled in number since the start of Lahey’s arrangement. Indeed, Bermuda is now among the highest in users of MRI and CT scans in the world and the cost of healthcare per person is also among the highest globally.’’