April 24, 2005
Faculty Council on Faculty Affairs
Report in Response to Class C Resolution Adopted by the Faculty Senate on October 24, 2002.
BACKGROUND:
This Faculty Council on Faculty Affairs (FCFA) report responds to the Faculty Senate Resolution of
October 24, 2002 that directed a Faculty Council to look into a settlement with Dr. Richard Winn, a UW
physician, and to examine, with respect to the use of University of Washington Physicians (UWP) funds,
whether “current regulations for spending funds from non-state origins are adequate…in specifying the
fiduciary duties of their administrators, and to provide sufficient openness [to] … the President, and the
affected faculty.”1
UWP funds were paid to settle a billing fraud case brought by the U.S. Attorney General’s Office. The
case, filed in 1999, involved overbilling for Medicare patient care2. It was based on a whistle-blower’s
complaint and involved misbillings over a 9-year period from 1995 through 2003 (a time period used by
Dean Ramsey but not consistently used by others).The case involved two phases, initially a criminal
investigation and then an investigation based on civil charges (under the False Claims Act). The criminal
case came to a close with 2 guilty pleas. One was by Richard Winn (Neurological Surgery ) in July 2002
who plead guilty to a single felony charge of obstruction of justice and paid $500,000 in repayment for
overbillings. The other was by William Couser (Nephrology) in March 2003 who plead guilty to a single
felony charge of health-care billing fraud and paid $100,000 in repayment for overbillings. During the
criminal phase of the investigation, a large number of physicians and others were subpoenaed to give
testimony under oath to a grand jury. This contributed substantially to large legal fees incurred by UW
Medicine3 during this investigation. The civil phase then continued until April 2004 when UW Medicine
reached agreement with the U.S. Dept. of Justice and paid $35 million to settle the Medicare overbilling
case.
This report by the FCFA is the final of several reports and responses already on file. These include: 1)
FCFA report on April 27, 2004 to the SEC; 2) response to the FCFA’s report by Dean Paul Ramsey on
May 25, 2004; 3) a second response by Dean Ramsey on August 8, 2004; 4) response to Dean Ramsey
by Prof. Kate O’Neill, the previous chair of the FCFA, on November 1, 2004. The FCFA concluded that
the ‘Winn affair’ was the tip of larger systemic problems in UW Medicine. These included issues of faculty
self-governance, lack of transparency of administrative decisions, and an atmosphere of intimidation. It
was apparent to Dan Luchtel, the ‘04-‘05 chair of the FCFA, that the faculty’s viewpoint had not been
heard and it seemed that interviewing faculty would be a way of telling their story. So, since becoming
chair, he interviewed a number of senior faculty in the SOM, a chair of a department in the SOM, a senior
administrator at one of the medical centers, other UW administrators, and Dean Paul Ramsey. In addition,
3 meetings of the FCFA were devoted to interviews with 2 senior faculty4 and with Dean Ramsey5.
1
April 28, 2004 cover letter by Prof. Kate O’Neill (the previous chair of the FCFA) to Dean Paul Ramsey.
2
In this report, the billing fraud case is sometimes referred to as the Medicare overbilling case. Actually, the billing
procedures for 3 programs were investigated—Medicare, Medicaid, and TRICARE (military health system
sponsored care).
3
UW Medicine is used in this report as the overarching administrative structure that oversees hospitals/medical
centers, their associated practice plans or groups, and a medical school. UW Medicine includes: UW School of
Medicine (SOM), UW Medical Center (UWMC), Harborview Medical Center (HMC), UW Physicians (UWP), UW
Physicians Network (UWPN), The University’s membership in the Children’s University Medical Group (CUMG);
and The University’s membership in the Seattle Cancer Care Alliance (SCCA).
4
See minutes of FCFA meetings on Nov. 30, 2004 and Dec. 7, 2004.
5
See minutes of FCFA meeting on Feb. 22, 2005.
Faculty Council on Faculty Affairs 1 May 2, 2005
In addition to the present chair and immediate past chair of the FCFA, current and former members of the
FCFA have devoted considerable time and energy to try to understand the nature of the Medicare billing
fraud case, how and why things went wrong, how decisions were made by UW Medicine administrators to
settle and pay for resolution of this case, the nature of the administrative process in UW Medicine and its
transparency or lack thereof to the faculty, the extent of faculty self governance in UW Medicine or lack
thereof, the financial impact on the faculty of the $35 million settlement and associated $27 million in
payment of legal fees, and the fairness of the settlement payment plan to the various departments and
entities that make up UW Medicine. The FCFA has also discussed pro-active steps that SOM and the UW
administration might take to improve relations within the medical school, especially between its faculty
and Dean Ramsey’s office.
The FCFA obtained much information and can correct aspects of the public record as published by the
media and offers interpretations of the evidence based on these data recognizing that our information is
incomplete. The hardest thing to understand was the billing ‘culture’ of UW Medicine. Repeatedly, we
were left with the realization that different people can look at the same ‘facts’ and come to different
conclusions. We hope that this report will be viewed as reasonably complete and fair by the various
parties involved in a painful episode in the history of UW.
UW Medicine is enormous in size and of enormous importance to UW. Its budget and number of faculty
constitute approximately half of UW’s operation. There are 1,761 full-time faculty and 4,424 volunteer
clinical faculty. Medical care in fiscal year 2004 included 850,000 outpatient visits, 125,000 emergency
room visits, and 40,000 hospitalizations. UW Medicine faculty obtained more than $750 million of
research funding in fiscal year 2004. The operating budget is approximately $2 billion/year.
SPECIFIC FINDINGS:
The ‘Winn affair’. At the time of the plea bargain by Dr. Winn and the Class C resolution that questioned
it, the terms of a settlement for Medicare overbilling had not yet been finalized. But long-standing
accusations had been made by UW faculty and staff that this practice was widespread. Nevertheless, UW
Medicine mounted a rigorous legal defense against the overbilling charges, paying attorney fees for
faculty subpoenaed to testify in front of a grand jury.
Dr. Winn was not charged with overbilling but on a criminal charge of obstruction of justice. At this point
Dr Winn and his attorney, Cyrus Vance Jr., entered into plea bargaining, involving several entities: UW
Medicine, the UW Board of Regents and the US Attorney, John McKay. An agreement was reached and
accepted on Oct 28, 2002, by The Honorable Robert S Lasnik, United States District Judge of Western
Washington.
It is instructive to examine John McKay's Sentencing Memorandum of Oct 24, 2002, in order to
appreciate how reprehensible Dr Winn's actions were:
"Defendant H. Richard Winn ... has pleaded guilty to obstructing a criminal health care fraud
investigation... The Government urges the Court to accept the Plea Agreement.
"At the time of his obstructive conduct, Dr. Winn was a highly regarded, influential member of the
University of Washington's School of Medicine, and wielded influence not only within his Department and
the School of Medicine, but in the larger national and international community of academic neurological
surgery.
"Dr. Winn has admitted that while he held this position of influence and power:
a. he instructed witnesses in the investigation to omit statements that would incriminate him;
b. he deliberately provided false exculpatory information to witnesses with the intent that they
would provide that false information to those conducting the investigation;
c. he persuaded witnesses to make material misrepresentations of facts to those conducting the
investigation so that they would not provide information that incriminated him; and that
d. he accomplished his purpose of obstructing the investigation by creating an atmosphere of
fear and intimidation within the Department of Neurological Surgery."
Faculty Council on Faculty Affairs 2 May 2, 2005
The government then recommended a sentence agreed to in the plea bargain: Conviction as a felon, loss
of position at the UW, repayment to the Government of $500,000, 1,000 hours of community service (but
not in Nepal as had been requested), probation for 5 years, and a fine of $4,000. The memorandum
emphasizes the advantages to UW of a speedy settlement in which "the Government, Dr Winn and the
community will be spared a lengthy, complicated trial that would cause significant disruption to the UW
and to the provision of medical care at several local hospitals."
Significantly, this plea agreement makes no mention of a 5-year salary guarantee for Dr. Winn from UW,
totaling up to $3.7 million, that was subsequently revealed. It is this portion of the settlement that many,
both within and without UW Medicine, describe variously as puzzling, exorbitant, spineless, infuriating,
egregious, a sellout, a cover-up, etc. How the $3.7 million was and is being paid is unclear, but probably
is from reserve funds. UW Medicine and UW Regents maintain that this cost was minor compared to
possible further legal expenses and disruption of UW Medicine operations.
How and why further lengthy proceedings and costs would have been incurred remains quite unclear. To
many, the case against Dr. Winn appeared too egregious to merit such a large financial payment. A
recurrent suspicion is that Dr. Winn might have been able to expose further wrong-doing by others, and it
is the impact of this that could have cost UW well in excess of $3.7 million. The discussions between the
parties leading to this part of the settlement remain sealed. Until those records are opened, or until other
information emerges, opinions beyond the arguments presented by UW Medicine and Regents remain
speculative.
In response to the FCFA’s questions as to the necessity of this settlement, Dean Ramsey argued that
without such a settlement, Dr. Winn would not have entered a guilty plea and the case would have gone
to a lengthy criminal trial. Furthermore, even if Dr. Winn had been convicted, the University would still
have faced a full review and hearing under provisions of the Faculty Code.
There are two problems with this response. First, while it puts the onus on Dr. Winn as being the party
responsible for the case possibly going to trial, it begs the question as to why the University did not want
to go to trial when it seemed like the right thing to do (and the University has not escaped the impression
that it has yet to describe forthrightly its reasons for not wanting to do so). Second, as far as the FCFA
can determine, it is not true that the University would secondarily have faced a full review and hearing
under the Faculty Code. As far as the FCFA can determine, Dr. Winn’s guilty plea to a felony terminated
his employment at the University of Washington. As stated in article 9.92.120 in the Revised Code of
Washington (RCW), Conviction of public officer forfeits trust, “The conviction of a public officer of any
felony or malfeasance in office shall entail, in addition to such other penalty as may be imposed, the
forfeiture of his office, and shall disqualify him from ever afterward holding any public office in this state.”
(Furthermore, Dr. Winn, by the nature of his employment, was a “public officer” as defined in RCW
9A.04.110(13).) In short, Dr. Winn would have lost all employment protections guaranteed by tenure and
the due process procedures of the faculty code.
The plea agreement in the sentencing memorandums described the rationale for the Government
agreeing to a downward departure of 6 levels (from level 14 to level 8) in the appropriate offense level
calculation. The rationale largely involved Dr. Winn’s stature within the community and his professional
reputation. The net effect of the reduced offense level calculation was to allow Dr. Winn to serve 5 years
probation instead of time in prison.
The plea agreement also required that Dr. Winn donate 1,000 hours of community service. The
defendant’s sentencing memorandum requested that this community service be done in Nepal. But the
Government’s sentencing memorandum stated that “the Government agrees with the Probation
Department recommendation that the Court reject the suggestion that this community service be
performed in Nepal. The Government wholeheartedly agrees that the spirit of a community service
obligation requires that the Defendant provide service to the community wronged by his criminal conduct,
and that in this instance, the community service should be provided to the residents and taxpayers of this
country.” The judge apparently agreed with the defendant, not the government. Dr. Winn was a person
Faculty Council on Faculty Affairs 3 May 2, 2005
who benefited greatly from his esteemed position and reputation. Dr Couser was also sentenced to 1,000
hours of community service and 5 years probation.
A further impact of the settlement with Dr. Winn was non-monetary. Many concerned physicians, and
others, have cynically concluded that, even here in our center of academic purity and excellence, criminal
conduct escaped appropriate punishment and was even rewarded. In their view, the example set for our
students, residents and trainees is deplorable. They maintain that it would have been preferable to risk
some further exposure, admit where mistakes were made, and move forward with dignity. For them, the
settlement as it stands remains a source of shame and embarrassment for this institution.
The above view is believed passionately by those who hold it but it is not shared by all in UW Medicine.
The alternative view is that despite a massive 4-year plus investigation by the U.S. Justice Department,
aided by the presence of a whistle-blower, in which some 3 million documents were subpoenaed, only a
single felony charge of overbilling was successively obtained—that against Dr. Couser. Several faculty in
the Medical School that were interviewed by the chair of the FCFA made the point that Drs. Winn and
Couser were “fall guys” or “scapegoats for us all” who were “unjustly humiliated.” They believe Drs. Winn
and Couser were excellent clinicians and that the fault lies, not with the faculty, but with complex, unfair
and contradictory Medicare regulations that are open to differing interpretations in how they should be
followed.
Authority of the Dean. The main charge of the Class C resolution was to determine if Dean Ramsey had
the authority to make the decisions he did, particularly with regard to the terms of the financial settlement.
The short answer seems to be “yes.” However, to put this apparently simple conclusion in context, it is
important to understand that the faculty in the SOM serve two masters, the University of Washington
(UW) and UW Physicians (UWP). The UW operates as an academic institution while the UWP has a
corporate structure. The UW is based on faculty self-governance; in UWP the faculty are employees of a
non-profit corporation and Dean Ramsey is the CEO of this corporation. And as CEO of UWP, Dean
Ramsey has complete or essentially complete control over the budget.
Things were not always this way. The University Hospital opened in 1959. A partnership structure was
formed in 1962 in order to distribute supplemental salary to the physicians in UW Medicine. During this
time, faculty were actively involved in departmental governance. But with continued growth in size and
complexity, senior administrators concluded that this model had become too cumbersome to operate
efficiently. So, in 1983, a more centralized corporate model (now known as UWP) was established. This
has concentrated the all-important power of the budget in the Dean’s office.
In a letter to the chair of the FCFA, a senior faculty with more than 35 years service in the SOM
addressed the historical changes in the SOM in the following way. “There was a time when the faculty
was actively engaged in the administrative activities of the Medical School. This was particularly evident
when the Faculty Practice Plan was a partnership which required not only transparency but involvement
of all the partners. Once the transition was made to a corporate governance structure for the Faculty
Practice Plan, however, both transparency and faculty involvement rapidly diminished. Since then, I have
noticed a steady alienation of the faculty in the administrative affairs of the Medical School, which instead
have been concentrated in the department chairs and Dean’s office. The extent of interaction between the
department chairs and the faculty has varied a good bit from department to department, depending on the
personality of the chair. There seems to have been little oversight by the Dean of this or other activities of
Department chairs. Additionally, in the last decade the Dean’s office has had very limited and superficial
contact with the faculty.”
The Class C resolution states that the UWP charter restricts the use of funds generated by UWP to
paying faculty salary and benefits, research, and teaching. But the Class C resolution also states “the
UWP is a non-profit corporation, controlled by the Dean of the Medical School.”
The charter being referred is more exactly known as the “Agreement Between the University of
Washington and the University Physicians Foundation” (the Foundation now being UWP). Section 4. The
Academic Support Fund is the section relevant to this discussion. In its entirety, it states, “All funds in
Faculty Council on Faculty Affairs 4 May 2, 2005
excess of the annual operating expenses of the Foundation shall be retained within the Foundation, for
the benefit of the School of Medicine, as an Academic Support Fund to be used by the School of
Medicine for the educational, research and other institutional needs of the School of Medicine.” The key
phase is “other institutional needs.” Whelter or not this phase is justification for using UWP funds to pay
for an overbilling settlement is open to different interpretations.
Process of the decision making with regard to the terms of the financial settlement. Dean Ramsey
was adamant during his interview with the FCFA that faculty were involved in the decision making
process. The conclusion of the FCFA is that, at best, this involved a very small number of faculty, perhaps
no more than those faculty members elected to the UW Board of Trustees. And it is unclear that these
faculty had any serious input into the decisions made but rather, were only the first to know of what
decisions had been made. Faculty member after faculty member who were interviewed said that they had
no input into the decision-making process. It is also telling that a document provided by Dean Ramsey in
his May 24, 2004 response to Prof. Kate O’Neill stated that the “practice plan leadership carefully
considered the various payment options.” It seems reasonable to conclude that the settlement terms was
a consensus arrived at by Dean Ramsey and a small number of senior UW Medicine administrators.”
Terms of the financial settlement. The financial settlement of the civil case involved the payment of $35
million by UW Medicine to the US government. This was the sum of $20 million (agreed upon by the two
parties as to the amount of Medicare overbilling by UW Medicine) plus a 1.75 multiplier penalty of $15
million. The initial estimates of overbilling by the two parties were hugely different—$100 million by the
federal government vs. $3.6 million by UW Medicine. How the $100 million estimate was arrived at is
unknown. The only audit that was done—that by the SOM—calculated that the overbillings amounted to
$3.6 million. According to Dean Ramsey, the high estimate of the federal government fits a pattern for
other cases where Medicare overbillings at academic medical centers have been investigated. That is,
the initial estimate starts high (in this case, $100 million) and then decreases to 10-20% of the original
figure (in this case, $20 million). While Dean Ramsey adamantly maintains that the total amount of
misbillings was $3.6 million, UW Medicine agreed to $20 million as the amount of overbillings in order to
settle the case.
The $35 million settlement was shared by several components of UW Medicine. Published accounts listed
the following distribution6:
Children’s Hospital: $6,635,000
UW Medical Center: $12,000,000
UW School of Medicine: $8,073,000
UW Physicians: $6,254,000
Children’s University Medical Group: $500,000
Winn: $1,439,000
Couser: $100,000
$35,001,000
In addition, Harborview Medical Center agreed to pay $10 million for “faculty support.”
The payments made by components of UW Medicine as listed above were made from each of their
“reserve funds.” A source of great confusion and bad feeling is the so-called “Dean’s fund” or “Dean’s
reserve fund,” particularly when it was reported that this fund had reserves of $180 million. Many faculty
thought that the obvious solution for payment of the settlement was from this fund. According to Dean
Ramsey, there is not a single Dean’s reserve fund. Rather, the ‘Dean’s reserve fund’ is better described
as ‘UW Medicine reserve funds’ and consists of the total assets in the reserve funds of components of
UW Medicine. Furthermore, not all of these funds are under the direct control of the Dean.
6
See Seattle Times, June 8, 2004, Did dean do enough in UW billing scandal?
Faculty Council on Faculty Affairs 5 May 2, 2005
In a April 4, 2005 memo to the chair of the FCFA, Dean Ramsey clarified the settlement terms of the
federal billing investigation as shown in the following tables (the remainder of this section is taken directly
from Dean Ramsey’s memo).
Final Distribution of Settlement Payment
CUMG
Division Reserves $640,435
Department Reserves $798,563
CHRMC Reserves $1,834,632
Subtotal from CUMG $3,273,630
UWP Department Reserves $6,253,526
SOM $8,171,343
UWMC $12,000,000
CHRMC $4,701,501
Total $34,400,000
The $35 million settlement gave credit for the $600,000 paid in connection with the settlements reached
with Drs. Winn and Couser. Thus, the remaining amount due was $34.4 million. The amount paid from
department and divisional reserves was allocated among the departments based on the ratio of
department revenue to total revenue for the five year period from 1999 through 2003. By requiring that all
practice plan contributions to the settlement would be from reserves, rather than from current revenue
flows, faculty salaries were protected.
Although Harborview did not contribute to the actual payment of the settlement, the Harborview Board did
agree to increase hospital support of Harborview-based faculty by up to $6 million over the next 5 years.
The Medical Center participation reflects the common support for faculty among all UW Medicine
organizations.
Payment of Legal Fees
The following table summarizes the sources of payment for the legal fees incurred in connection with the
federal billing investigation as of November 30, 2004.
UWP $16,747,974
CUMG $3,471,725
UW $4,554,623
UWMC/HMC $2,161,237
Total $26,936,753
(Note: The above sum is as it appears in Dean Ramsey’s memo; a sum of $26,935,559 was calculated
by the FCFA.)
The allocation between the University and UW Medicine (versus practice plans) legal expenses was
based on the category of expense involved. Those UW legal expenses allocated to UW Medicine were
shared equally by UWMC and HMC.
Legal issue/service Central UW UW Medicine
Institutional liability 75% 25%
Representation of faculty, staff, residents 25% 75%
for individual liability
Document production 50% 50%
Practice plan legal expenses were allocated between UWP and CUMG based on the specific legal issues
involved, in combination with established cost sharing formulas that had been developed over time to deal
with a variety of shared cost items
Faculty Council on Faculty Affairs 6 May 2, 2005
UW Medicine Reserves
UWMC and Harborview, SOM departments, and the Dean of Medicine hold reserves to mitigate business
risks, unforeseen contingencies, and to protect operations and salaries from the normal variation in cash
collections. As a general rule, reserves are maintained at a level that represents between 90 and 180
days of operating costs including salaries. The $180 million figure described in the media referred to
reserves held at all of the organizations comprising UW Medicine at the time of the settlement.
Reserves as of June 30, 2004 (last audited financial statements) held by the organizations within UW
Medicine include:
UW Medical Center: $105 million;
Harborview Medical Center: $36 million7;
School of Medicine reserves held by UWP and CUMG: $60 million8;
Dean of Medicine reserves held by UWP and CUMG: $21 million9.
These reserves total $222 million but presently do not meet the goal of having reserves to cover 90-180
days of operating costs.
Financial impact of the settlement on faculty salaries and benefits. Although statements have been
published in the media that there have been no financial impacts on faculty salaries, this is not true. It is
important to realize that there are 3 financial streams that contribute to salaries of faculty in UWP,
particularly for faculty in the clinical departments. These are: university salary, salary based on clinical
and research grant activities, and incentive pay (based on the amount of clinical activity).
To provide background, all clinical fees billed by physicians who are members of UWP are collected by
UW Medicine and none is paid directly to the physicians. The money is then distributed as follows. The
first cut is to pay operating expenses. Then, of the remaining portion, 11% is distributed to the Dean’s
office, 45% is distributed to the departments in the SOM, and the remainder supports the clinical salaries
of physicians. Exactly how incentive pay money is generated and distributed is unclear and seems
department specific. Given relative lack of state support (6% of the operating budget), the university
portion may be a relatively small component of the salaries for most clinical faculty, while the clinical and
incentive components may be quite significant.
The $35 million settlement was paid in one lump sum to the government in mid-June 2004. Since it was
from reserve funds, faculty salaries were not impacted. On the other hand, some faculty have worried that
there may be long-term negative impacts on faculty salaries as funds are used to replenish the reserves.
This concern seems without merit.
Payment of $27 million for legal fees had a more complicated payment plan. The payment of legal fees
has taken place over a 5-year period and has been from a variety of sources—reserve funds, a $10
million insurance policy, and operating funds in the case of some clinical departments. For some clinical
departments, there apparently has been a negative impact on faculty salaries, particularly with regard to
incentive pay.
Another negative impact on the faculty has been the loss of benefits from Plan 35. This plan allowed
faculty and their dependents to obtain free medical care if it is was provided by fellow physicians in UWP.
This benefit was eliminated during the course of the federal investigation, apparently as a means to
increase operating revenue.
7
All of the assets of HMC are the property of King County.
8
These are reserves held for each of the 18 clinical departments of the SOM.
9
These are the only funds available to the Dean to be spent to support chair recruitment, educational programs, and
unforeseen demands such as the federal billing settlement. The Dean provided $8.2 million toward the settlement, in
part to meet the allocated share of departments that did not have sufficient reserves.
Faculty Council on Faculty Affairs 7 May 2, 2005
Concerning the repayments by Dr. Winn and Dr. Couser, Dr. Winn paid $500,000 from his own pocket
while UW Medicine reimbursed Dr. Couser’s $100,000 repayment. Both were eventually appointed to
faculty positions at other medical schools, Dr. Winn at Mt. Sinai in New York City and Dr. Couser at
Vanderbilt. Why UW Medicine reimbursed Dr. Couser and not Dr. Winn is not apparent.
Fairness of the settlement to the various departments. The response of many faculty—particularly
those not in the Depts. of Neurological Surgery or Nephrology— was that it was unfair that the payment of
the settlement was going to be made across the board by all departments. However, the settlement was
based largely on the civil phase of the investigation in which the Office of Attorney General judged that
overbilling was systemic within UW Medicine, not just in the Departments of Neurological Surgery and
Nephrology. Faculty can rightfully feel aggrieved that they were not consulted about how the settlement
would be paid (for example, via a web-based survey or via public forums) and thus felt that it was
imposed on them. In the criminal phase in which Winn and Couser were each convicted on single felony
counts, the question of fairness for how payment of legal fees was distributed is more of an open
question.
As already stated, the $3.7 million settlement with Dr. Winn was particularly difficult to accept by many
faculty in the SOM. As one faculty member phased it, the settlement was a “good business decision if not
morally so.” In the words of another faculty member, “Why is Winn, who did wrong, being rewarded while
the rest of us law-abiding citizens are being punished?” Another payment that has been little noted by the
media is that the terms of the settlement required UW Medicine to pay the attorney fees of the whistle
blower.
‘Culture’ of medical schools/centers with regard to Medicare regulations. Trying to understand
medical school ‘culture’ is probably the crux to understanding the validity of the federal case. There
clearly was a difference in interpretation by UW Medicine and the federal government in how to bill under
Medicare regulations. The dispute most often involved the validity of billing by a senior attending
physician whether present or not during the medical procedure billed for. Residents (who are physicians
but are under the supervision of faculty physicians) often perform procedures that are being billed for. But
according to the Medicare regulations, residents (who are in training) cannot submit billing for procedures
they do if a senior attending physician is not present. This description simplifies a considerably more
complex billing reality in an academic medical center. A more realistic description is given in Winn’s article
(cited in footnote #13)
As one faculty member expressed it, the Medicare regulations “are the root of the problem.” They
certainly are complex, ever changing, and lengthy (some 8,000 pages as described to the chair of the
FCFA by one administrator). As another senior faculty expressed it, the problem with the Medicare billing
regulations is that it is a health care system designed for use in private clinics but is fiscally unsound
when applied in teaching hospitals or settings of what might be described as ‘corporate medicine
practice.’ The name of the game is “to capture every dollar on the table,” but the question is how to do this
ethically and legally given fiscally restrictive Medicare regulations.
Problems with Medicare billing regulations as experienced by UW Medicine have also occurred at more
than 20 academic medical centers across the country. Through 2003, Medicare overbilling settlements at
hospitals in the U.S. have totaled some $169 million. Prior to the UW settlement, the largest settlement
was $30 million paid by the University of Pennsylvania in 1995.
So, on the one hand, it seems true that what was occurring at UW Medicine was also happening in other
medical schools across the country. As several faculty members put it, “everyone was doing it.” On the
other hand, what was accepted as normal operating procedures deeply troubled some faculty and staff.
Some faculty expressed worries about being asked to break the law and working in “a culture of
misbilling” at UW Medicine. It also bothered one whistle blower in particular and the federal government.
What was different about the UW case compared to other medical schools across the country was the
presence of an inside whistleblower co-operating with the federal government. The UW was a big target
and the federal government apparently saw this as an opportunity to make an example of a medical
school to get the attention of other medical schools. This strategy seems to have worked.
Faculty Council on Faculty Affairs 8 May 2, 2005
Dean Ramsey strongly disputes that there was “a culture of misbilling” at UW Medicine. In the FCFA
interview with Ramsey, he maintained that there were very few cases—much less than 1%—where the
Federal investigators questioned the intent of billing practices of UW physicians. Rather, unintentional or
innocent mistakes were made, both by faculty and by staff doing the bill coding. Ramsey was supported
by the U.S. attorney who acknowledged that “the vast majority of attending physicians at the University of
Washington take their compliance obligations seriously and serve their profession and our community
extremely well.”
So what was the balance between right and wrong? A troubling statement was made in one of the
documents in Dean Ramsey’s May 24, 2004 response to Prof. Kate O’Neill. In a letter dated 4/3/03
addressed to “Dear UWP Trustee,” Dean Ramsey discusses the just concluded settlement with Dr.
Couser. The letter states that “Dr. Couser pled guilty to an instance in 1996 in which he willfully inserted a
false note into a patient file, knowing that it would result in a false claim for his services.” And further “Dr.
Couser also admitted in open court, under oath, that from approximately September 1991 through
approximately April 2002, he did essentially the same thing. He admitted that he had knowingly and
willfully falsely represented his presence by writing notes in patient files indicating his presence, when he
knew that he may not have been present and when, in many instances, he had not been present.” This is
about as close to a ‘smoking gun’ that the FCFA came to in showing a “false signing” culture existed, at
least for some faculty at UW Medicine. Furthermore, if we are to believe that UW Medicine was no
different from other academic medical centers, such practices were common across the country.
Mistakes made—intentional or unintentional? A Seattle Times editorial (May 6, 2004) expressed the
view that characterizing the wrongdoing as “innocent mistakes” was “galling.” But during the FCFA
interview, Dean Ramsey strongly defended his position that the billing errors were largely unintentional,
whether errors made by the physicians or by the staff-level coders who entered or coded the bills. He
maintained that the vast majority of the faculty and staff were trying to do the right thing and that the
federal government did not pursue any of the practice plans with having intent to submit false billings. A
more detailed description of the billing difficulties is included in the FCFA minutes referenced in footnote
#5.
Changes/corrections made. It is disconcerting to read a memo dated as late as Nov. 2004, from the
Communication Committee to the UWP Faculty, that “the Communications Committee realizes that for
many of us the inner working of the UWP billing process is an enigma wrapped in a conundrum,”
Nevertheless, Dean Ramsey assured the FCFA that a large number of changes and improvements have
been made in the procedures for billing and compliance10. A Compliance Committee was created in 2001
to provide oversight of compliance programs at a UW Medicine-wide level. The Committee meets monthly
with the compliance officers from UW Medicine component units involved in billing.
More extensive training of both faculty and staff is now done. There was an almost complete turnover (17
of 22) in the administrators who oversaw billing of the practice plans (2000-2003). Staffing has grown to
more than 30 individuals currently working full-time on compliance matters. Mandatory training for
physicians was instituted (2001-2002). There are hotlines that can be used to express concerns and
several attorneys work as full-time counsel for the UWP. Compliance-related funding is now
approximately $4 million per year.
Overall, there is now greater consistency of interpretation of billing regulations across the different sites of
practice. Better lines of communication have been established between physicians and billing personnel.
And importantly, there is now investigation and resolution of billing compliance concerns raised by staff. In
his interview with the FCFA, Dean Ramsey readily admitted that a major mistake was made when the
concerns of the whistle blower did not make it to higher administrative levels to be acted on. His sense of
frustration led him to take his concerns to the federal level.
10
Summarized in an e-mail, 4/8/05, to the chair of the FCFA.
Faculty Council on Faculty Affairs 9 May 2, 2005
Why is Ramsey still Dean of SOM and why was he selected as chair of the UW Presidential Search
Committee? These 2 questions were asked almost without exception by faculty that were interviewed by
the chair of the FCFA. While provocative, the questions deserve some effort to answer since they are
such an issue with the faculty. The short answer is of course that neither the chair or members of FCFA
know the answers to these questions as we are not privy to the decision-making processes of the central
administration and more importantly, of the Board of Regents.
Nevertheless, as far as the FCFA can determine, Dean Ramsey—whatever administrative errors he
made—seemed always to try to do the right thing. Although a charge was by a single individual that Dean
Ramsey acted unethically, such a charge was not supported by any evidence the FCFA reviewed.
Remarkably, throughout the entire federal case, he never was represented by a lawyer. In an interview
with the chair of the FCFA, Dean Ramsey said that throughout the period of the investigation, he tried to
stay focused on teaching, and on facilitating faculty research and patient care. He led efforts to revamp
the medical curriculum (for the first time in 30 years) and was extensively involved in efforts to develop
space and infrastructure at South Lake Union and the new Genome Sciences/Bioengineering facilities on
campus.
During his interview with the FCFA, it was apparent that Dean Ramsey cared deeply about UW and UW
Medicine. It is also clear that Dean Ramsey has the strong support of senior administrators in the SOM. A
departmental chair interviewed by the chair of the FCFA was strongly supportive of Dean Ramsey, saying
that he was accessible and supportive of good ideas. A Medical Center administrator who was
interviewed gave him high marks for being a well-organized, decisive, and a forward-looking manager of a
very complex $2 billion/year enterprise that has operated in the black except for a single $1.2 million
shortfall in 2002 at Harborview. This is noteworthy given the severe funding restrictions that academic
medical centers operate under. While it is unclear what the relationship is between the current central
administration and Dean Ramsey, he has had the strong support of the Board of Regents11 and the
department chairs in the Medical School12.
CONCLUSIONS:
There is no doubt that things went wrong, mistakes were made, and UW & UW Medicine paid a large sum
of money to settle the case. Who was at fault? The problem with trying to answer this question is the
issue alluded to at the beginning of this report; that is, different people can look at the same ‘facts’ and
come to different conclusions. In his interview with the FCFA, Dean Ramsey declared that pre-1999, he
thought UW Medicine had an adequate billing and compliance system, but the federal misbilling case
made it clear that it was not good enough. Ramsey has accepted some personal responsibility for the
billing/compliance problems in UW Medicine.
There are two broad ways of interpreting the ‘facts’ of this case. The first is that there was
mismanagement and lack of accountability at the top of UW Medicine. Complexity of regulations is not an
excuse for not complying with them. There were, after all, faculty who were not “going along” with a
misbilling culture—perhaps this included most of the faculty and ‘misbilling culture’ is a misnomer. A
second interpretation is “everyone was doing it” and while Dean Ramsey can be faulted for not setting a
high enough standard or not running a tight enough ship, he nevertheless acted in the best interests of
UW Medicine and managed to navigate, if not always entirely successfully, through a difficult series of
problems. The FCFA encourages the central administration to give careful attention to the validity of
either interpretation.
11
See 6/25/04 opinion piece in the Seattle Times, UW Medicine and community well-served by Dean Ramsey by
Gerald Grinstein, president of the UW Board of Regents and Dennis Okamoto, Chair of the UW Medicine Board.
12
A 6/20/04 editorial in The Seattle Times called for the replacement of Dean Ramsey. The chairs of all 29
departments in the School of medicine signed a letter sent to both the UW Board of Regents and the UW Medicine
Board strongly defending Ramsay’s leadership (6/25/04 article in the Seattle P-I, Support pours in for dean of UW
medicine.)
Faculty Council on Faculty Affairs 10 May 2, 2005
In any case, it can be safely concluded that presently, everyone is “not doing it”—both here and at other
academic medical centers across the country. Compliance is now closely monitored and the rules are
followed to the letter.
A major problem has been the issue of communication between the Dean’s office and the faculty. It
seems that Dean Ramsey has made some major strides in this area, particularly communication “from the
top down.” Communication “from the bottom up” still needs improvement. Based on our interviews with
faculty, there is still not an open, 2-way dialogue as Ramsey may believe there is.
The question arises as to why the federal government didn’t push their case harder in both the criminal
and civil phases when it seems they could have. Dean Ramsey offered 3 reasons:
1) they recognized the ‘good’ that UW Medicine does;
2) the vast majority of the faculty was trying to do the right thing;
3) a strong case just wasn’t there.
Finally, it is clear that one aspect of the problem is that “we have seen the enemy and it is us.” That is,
there are faculty who complain about their working conditions and then, for example, take an almost willful
pride in ‘never attending faculty meetings.’ This attitude seems all too common in the medical school. It is
difficult to know what is going on and to do something about it when one is not paying attention.
RECOMMENDATIONS:
The FCFA recommends these actions in order to restore the spirit and commitment of the SOM faculty to
UW, to restore trust between SOM faculty and administration, and to establish a robust system of self-
governance in the UW SOM.
Transparency issues.
• Institute web based descriptions of faculty rights and expectations as members of the UWP. Also,
provide web-based information about ways to remedy any abuses.
• Institute greater transparency in how the 6 non-chairs members are elected to the UWP Board of
Trustees. These are supposed be elections of faculty members from the entire faculty but instead, a
pre-selected group of faculty are voted on. The ground rules for such pre-selection of candidates are
not well known and probably invalid in any case.
• Institute greater transparency of the central management of UWP. While many improvements in the
compliance program have been made both in terms of increased funding and increased personnel
and the appointment of compliance committees, there was no apparent means of independently
verifying such improvements via publicly available information. Compliance committees are not
included on hard copy lists of standing committees and councils of UW Medicine. SOM web pages
with descriptions of such committees don’t seem to exist. A web site for the UWP does not seem to
exist.
• Similarly, greater transparency is needed in showing how the provisions of new Corporate Integrity
Agreement (CIA) will be following with regard to provisions of the Sarbanes-Oxley Act. While there
seems to be substantial improvement in these areas, it was not possible for the FCFA to
independently verify or substantiate such improvements with publicly available information.
• Reinstate the UWP Handbook (a faculty Handbook describing UWP information and procedures) but
in web-based format.
• Use the FCFA as the advocate voice of the faculty and based on the FCFA reports, hold a series of
public forums and written documents to 1) clarify to the UW medical faculty misunderstandings about
the “Dean’s Fund,” 2) clarify how the reserve funds are generated, and 3) share the new measures
Faculty Council on Faculty Affairs 11 May 2, 2005
suggested here by the FCFA. Such transparent dialogues in conjunction with enactment of the steps
suggested here will “clear the air” among the faculty and, over time, establish a healthy relationship
between SOM faculty and administration. To be involved with and committed to the UW, SOM faculty
need to feel empowered and respected by their administrators.
Administrative structure.
• A conflict of interest appears to exist in an organization where the Dean acts as CEO and its board of
directors (UWP Board of Trustees) is made up largely of clinical department chairs who are appointed
by the Dean. Since chairs serve at the pleasure of the dean, their independence as board members is
compromised. A solution may be appointment of non-medical school or non-university trustees to the
board13. If recent experience in the corporate world is any guide, a strong, independent board is the
best safeguard to prevent mismanagement and ethical abuses.
• Provide annual financial statements of UWP to the faculty if requested. This is in the bylaws but,
according to interviews with faculty, has not been honored by UW Medicine. At best, only
departmental financial statements are given to the faculty if requested.
• Rewrite the original founding documents such as the “Agreement Between the University of
Washington and the University Physicians Foundation” and the “Bylaws of the University Physicians
Foundation” to reflect the increased complexity of UW Medicine. That is, these documents were
written when UW Medicine consisted largely of the SOM and the University Hospital. Now, many
more components and layers of complexity make up UW Medicine.
Financial issues.
• Do an independent review of the current policy of the dependence on clinical revenues to support the
reserve funds.
• Do an independent review seeking accountability in the financial status of UW Medicine, the practice
plans and the reserve funds.
• Institute a policy that the reserve funds of the various components of UW Medicine will be monitored
by an independent outside evaluator.
• Make the status of the reserve funds available to the faculty of UW Medicine.
• Perform a financial audit of UWP by the State Auditor. The present auditing firm is KPMG, based in
Bermuda. They are one of so-called ‘Big 5’ and these firms have seriously failed some audits,
including KPMG and Arthur Anderson (the former auditor of Enron).
Adopted by the Senate Executive Committee
May 2, 2005
13
Conflict of interest recommendations are discussed in an article by Richard Winn. He was required to write this
article by terms of his settlement. The article is entitled: Errors in compliance with federal rules and regulations
relating to health care benefits programs: the University of Washington Department of Neurological Surgery
experience. J Neurosurg 100: 47-55, 2004. This article, while self-serving, insightfully reviews the history of
compliance problems at UW Medicine including factors that contributed to such problems, such as lack of training.
Faculty Council on Faculty Affairs 12 May 2, 2005