A former cardiologist is suing the University of Kentucky’s King’s Daughters Medical Center for nearly $16 million in reimbursement for legal fees after being acquitted on healthcare fraud charges brought against him.
Dr. Richard Paulus spent $15.8 million defending himself in two federal trials over the course of eight years, resulting from work done while a doctor at King’s Daughters Medical Center in Ashland.
He filed a lawsuit against the hospital in July, which was acquired by the University of Kentucky in December 2022, seeking indemnification.
Indemnification provides compensation for harm or loss.
Paulus was charged and later acquitted on counts of healthcare fraud and false statements made for cardiology procedures he performed at King’s Daughters. The original lawsuit against Paulus, filed by the U.S. Attorney’s Office for the Eastern District of Kentucky , claimed he performed medically unnecessary surgeries on patients with blockages in their arteries.
Generally, the artery should be at least 70% blocked to require the placement of a stent, which helps restore blood flow to the heart. Paulus was accused of performing that procedure on patients with significantly less than a 70% blockage.
After two trials and multiple appeals, Paulus was acquitted on all charges in 2023. The lawsuit Paulus filed in July said UK King’s Daughters owes him indemnification, or reimbursement, which was outlined in the hospital’s medical staff bylaws.
“All Medical Staff Leaders, committee members, and other Medical Staff members acting on behalf of the Medical Center, shall be indemnified for any action taken or statements or recommendations made when acting within the scope of their duties as representatives of the Medical Center or Medical Staff, to the fullest extent permitted by law,” the bylaws said.
Paulus claimed the university should reimburse him the millions of dollars, which he personally paid for throughout proceedings.
UK responded to the lawsuit saying the medical staff bylaws were inapplicable. It also asked the judge to dismiss all claims because the hospital has retroactive governmental immunity.
That would mean UK cannot be sued, because it performs a function integral to state government. UK argued that as a branch of the university, UK King’s Daughters also has that immunity.
“Sovereign or governmental immunity is not just immunity from a final verdict, judgment, or damages. It is immunity from suit in its entirety and the time and expense of even discovery and motion practice,” the university’s response document said.
Paulus’ lawyers filed an answer on Monday, which argued he has a right to sue.
Attorneys for Paulus did not immediately respond to request for comment. UK Spokesperson Jay Blanton said the university’s position is reflected in its motion to dismiss and gave no further comment.
How we got here
In 2011, the US Department of Health and Human Services investigated King’s Daughters and a number of its doctors, including Paulus, on suspicion of healthcare fraud.
In 2014, King’s Daughters reached a civil settlement and agreed to pay $40.9 million to the federal government to resolve claims of unnecessarily billing medicare and medicaid.
Paulus retired in 2013 and voluntarily surrendered his medical license in 2014 after a separate but similar complaint was filed with the Kentucky Medical Board of Licensure.
That same year, Paulus was indicted on one count of healthcare fraud and 26 counts of making false statements related to health care, resulting from the Department of Health and Human Services investigation. No one else named in the original investigation was charged.
At trial in 2016, Paulus was found guilty on one charge of healthcare fraud and 10 counts of false statements. In 2017, he motioned for and was granted acquittal and a new trial.
The new jury agreed on one not-guilty charge and was deadlocked on the others.
In 2023, Paulus was acquitted on all charges.
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