RELATED: Doctor siphoned funds for personal use, suits allege

RELATED: Pay dispute brings split at practice

BY JIM HALL

Internal disputes in a thriving medical practice in Fredericksburg were finally resolved earlier this month, but not before an audit by Mary Washington Hospital resulted in a refund of a quarter-million dollars from the physician group.

A hospital official confirmed that the audit took place at Central Virginia OB/GYN, and that Dr.
Joon Kil, owner of the practice, agreed to refund $250,000. The official described the incident as a “misunderstanding” on Central Virginia’s part.
However, two lawsuits filed against Kil by former employees used harsher language. The suits, which have been settled, claimed that Kil defrauded the hospital and manipulated one of its loan programs for his personal gain. Kil denied the allegations.
The lawsuits were filed separately in Fredericksburg Circuit Court, beginning in December 2010.
Dr. Barbara Mercado, an obstetrician/gynecologist at Central Virginia OB/GYN for more than 11 years, was the first to challenge Kil. Her suit came two weeks after Kil had her fired, according to court papers.
Bobbi Clarke, Kil’s former practice manager, was the other accuser. Clarke worked for Kil for 23 years before he fired her in January 2011, according to court papers. She filed her suit three months later.
Mercado and Kil settled her complaint in about a month.
However, Clarke’s complaint lingered on the court docket for months, with both sides trading charges and counter-charges.
On Feb. 1, after The Free Lance–Star requested interviews with Kil and Clarke, the two reached a settlement and issued a joint statement.
“In working through the details of her departure from the practice, both Ms. Clarke and Dr. Kil have made statements and taken actions which they now regret,” the statement said in part. “At this time, they have resolved all of their differences and the lawsuit that was pending in the circuit court is being dismissed at their mutual request.”
The terms of the settlements in both lawsuits were not revealed.
Even so, the court papers offer a rare look at the financial dealings of a popular medical group.
The papers describe Central Virginia OB/GYN as a busy practice with significant revenues, and workers who, at times, were indifferent to basic accounting controls. As Kil himself said in his rebuttal to Clarke, Central Virginia had “a culture in which employees did not maintain a proper accounting of the monies.”
Court papers also focus on one of the programs offered by Mary Washington Hospital, its physician-recruitment loan program.
To encourage local medical offices to recruit new doctors, Mary Washington reimburses the practices for some of the first-year costs associated with employing the doctors.
To receive the reimbursement, the practices submit monthly invoices to the hospital for expenses such as salary, rent, phone, advertising, medical supplies and office supplies.
Physicians hired under the program are supposed to sign the invoices and endorse the checks from the hospital to vouch for their accuracy.
Central Virginia OB/GYN participated in the program, and according to Clarke’s court claim, it filed bogus invoices and forged the signatures of the participating physicians.
Clarke said in her suit: “The physician loan program was not used by Central Virginia for its intended purpose but rather was used and manipulated by Kil to fraudulently overcharge Mary Washington and enrich himself personally from the payments received from Mary Washington.”
Specifically, Clarke alleged, “Kil overcharged Mary Washington for the services of the physician employees and reported expenditures for overhead, staff resources and supplies that were false.”
Clarke also contended that “Kil, individually or through others at his direction, signed the physician employee’s name to the falsified monthly summaries and submitted the invoices to Mary Washington for payment.”
And when the reimbursement checks came from Mary Washington, Kil, or others at his direction, “endorsed them in the name of the physician employee and then deposited the checks into Kil’s personal bank accounts,” according to Clarke’s lawsuit.
Mercado made similar claims in her lawsuit.
She said: “In order to increase payment from Mary Washington Hospital, Central Virginia forged physician signatures and misrepresented to Mary Washington Hospital that all equipment and supplies were used by physicians participating in the physician loan program when the equipment and supplies were used by physicians such as Dr. Mercado.”
These allegations first surfaced in August 2010, according to Clarke’s lawsuit.
That was when a physician at Central Virginia OB/GYN who was participating in the loan program complained to the hospital that the invoices filed in her name were not accurate. The physician was leaving Central Virginia and the Fredericksburg area, and the hospital had demanded repayment of the loan, according to Clarke’s lawsuit.
The loan program requires a physician to reimburse the hospital if the physician does not practice in the area for at least three years.
On hearing these complaints from the physician, the hospital demanded an audit of Central Virginia’s books, according to Clarke’s lawsuit. The audit resulted in Central Virginia OB/GYN making a refund to the hospital.
“Mary Washington and Kil agreed that Central Virginia, and not Kil, would reimburse to Mary Washington the total sum of $250,000 payable over five years, in satisfaction of the improper loan payments and reimbursements issued by Mary Washington,” according to Clarke’s lawsuit.
In the court papers, Kil stated that the hospital asked for and conducted an audit of “certain accounting records” at Central Virginia OB/GYN. He said that he and the hospital “entered into an agreement to resolve any disputes about the manner in which the physician loan program was handled.”
Kil denied that he fraudulently overcharged the hospital. He blamed Clarke for any “overstatements, overcharges and false requests” with the physician loan program, according to court papers.
Clarke was paid $160,000 a year to, among other duties, supervise the billing and collection departments at Central Virginia OB/GYN. She also handled the financial details of the loan program, according to Kil’s filings.
As for the hospital, when asked whether it had contacted law-enforcement officials about Central Virginia’s invoices, a hospital official described the incident as a misunderstanding.
“Through an audit, it was discovered that there was a misunderstanding by Central Virginia OB/GYN as to reimbursable expenses and documentation of expense requirements under the physician loan program,” Walt Kiwall, executive vice president and chief operating officer, said in a statement.
“Central Virginia OB/GYN agreed to repay $250,000. We are not aware of any criminal conduct,” the statement said.
No criminal charges were filed against Kil or Clarke.
Kil has been president and majority shareholder of Central Virginia since its founding. He is a resident of McLean and has worked in the Fredericksburg area for 23 years.
His practice, with seven doctors, is one of the largest in the region. Its doctors deliver more than 1,000 babies a year.

 

Jim Hall: 540/374-5433
jhall@freelancestar.com