Taxpayers pay malpractice awards involving federally qualified health centers; in Kentucky, $7.7 million was paid in 2018-2021

By Melissa Patrick and Al Cross

Kentucky Health News

Federally qualified health centers, or FQHCs, are very important parts of the health-care delivery system for the poor in Kentucky, largely because they can't turn anyone away and charge patients based on their income. In return, they get an annual grant and higher reimbursements from Medicaid and Medicare — and, for the vast majority of clinics, financial immunity from malpractice lawsuits.

The centers can still be sued for malpractice, but the federal government becomes the defendant and pays any settlements or judgments. That little-known aspect of FQHCs is examined in a story by Phil Galweitz and Bram Sable-Smith of Kaiser Health News, along with a list of the 485 payouts made on the centers' behalf from 2018 through 2021, totaling $410 million. 

Over that four years, Kentucky had nine payouts totaling $7,718,629, made on behalf of six health centers. Most of that, $5 million, was to settle a claim involving Sterling Health Solutions, based in Mount Sterling. The second largest, $2,082,337, was a judgment involving Big Sandy Health Care of Prestonsburg.

Both cases involved women's health care, which is often the object of high-dollar malpractice claims. Doctors say the cost and availability of malpractice insurance discourages opening such practices, especially in rural areas. 

Screenshot of Kaiser Health News' Kentucky list, adapted by Ky. Health News

"Malpractice lawsuits are a risk for all health-care providers and are just one barometer of quality of care," Kaiser Health News says. "The settlements and court judgments against the health centers don’t measure the clinics’ overall performance."

The clinics fill many needs. "Nearly half of the centers’ patients are covered by Medicaid, and 20 percent are uninsured," Kaiser reports. "Even lawyers who have sued on behalf of health center patients acknowledge the importance of the facilities. Rhode Island plaintiff attorney Amato DeLuca said that the health centers serve a vital role in the health industry and that he had found “a lot of really wonderful, extraordinarily capable people that do a really good job” at the centers. Yet everyone must be held accountable for mistakes, DeLuca said."

The biggest payments

Kentucky's biggest payment in 2018-21, $5 million, settled a $42 million claim by Rebecca Anderson and Randy Brooks of Montgomery County that their son, known in court documents as G.B., suffered severe and permanent injuries during and after his birth in 2015 because Dr. Byram Ratliff of Sterling Health Solutions failed to respond to fetal distress as evidenced on the fetal heart monitor strips prior to delivery. "Dr. Ratliff failed to institute prompt and proper medical care resulting in severe permanent injury," they alleged. "As a result, G.B. will require a lifetime of medical care and treatment."

A bench trial of the case was recessed for negotiations that resulted in a settlement, comprising $2.5 million of "upfront cash" to be held in escrow until all liens and claims in the case were resolved, and a $2.5 million trust fund for future medical care. The plaintiff's attorneys were awarded case expenses of $281,873 and fees of $1,250,000. Attorney fees in such cases are limited to 25% of the award. 

A document titled "Stipulation for compromise settlement and release" says the settlement is in no way an admission of "liability or fault."

Big Sandy Health Care was connected to the second largest amount paid in Kentucky during the four-year period, $2,082,337. This case was a medical negligence claim by Lisa Ann Crispen against Dr. Joanna Santiesteban, Dr. Enrico Ascani and Big Sandy Health Care for failure to diagnose uterine cancer. 

After a bench trial, Chief U.S. District Judge Karen Caldwell awarded the judgment, writing, "Chrispen proved by a preponderance of the evidence that Big Sandy's negligence in evaluating, diagnosing, and treating Chrispen's cancer caused her to suffer past and future lost wages, past and future medical expenses, past and future physical pain and suffering, and past and future emotional pain and suffering." 

The Kaiser list shows that another federal payment involving Big Sandy Health Care was made during the four-year period, in 2018 for $35,292.

Burkesville-based Cumberland Family Medical Centers was involved in the third largest payment, $225,000. This was in a case filed by Judy and John Courtier of Monroe County, alleging that the Tompkinsville center incorrectly transcribed a prescription from a rheumatologist, resulting in Judy Courtier taking a toxic amount of methotrexate (2.5 milligrams twice a day instead of two 2.5 milligrams tablets once a week), causing conditions that required hospitalization. The parties reached a settlement in October 2018.

The Kaiser list shows another federal payment involving Cumberland Family Medical Centers was made during the four-year period, in fiscal 2019 for $26,000.

The chain of clinics is Kentucky's largest federally qualified health center. It had gross revenues of $83 million in 2019, according to the Form 990 for tax-exempt nonprofits that it filed with the Internal Revenue Service. Kentucky nonprofits must also file the forms with the state attorney general's office.

Sterling reported 2019 revenues of $13.6 million. The latest filing at the attorney general's office from Big Sandy, for 2016, showed revenues of $19.5 million.

Family Health Centers of Louisville, which had 2019 revenues of $45 million, was involved in the fourth largest payment in 2018-21, $200,000. It settled a claim by Carolyn Boerste alleging failure to tell her that a radiology report noted she had a 12-inch-by-12-inch laparotomy sponge that snaked through her small intestine for 19 months before it was removed. 

Kentucky Health News offered the four health centers the opportunity to comment, but none did.

Other Kentucky payments in the four-year period involved Grace Community Health Center of Corbin, also called Grace Health; and Fairview Community Health Center of Bowling Green.

Why do taxpayers pay these settlements? 

To win congressional protection in the 1990s, federally qualified health centers "argued their revenues were limited and malpractice insurance would divert money that could better be used for patient care," Kaiser Health News reports. About 86% of the 1,375 clinics have this protection, which comes with a list of requirements. 

To get the protection, a clinic "must have quality- improvement and risk-management programs and must show regulators that they’ve reviewed the professional credentials, malpractice claims, and license status of their physicians and other clinicians," Kaiser reports. "Ben Money, a senior vice president for the National Association of Community Health Centers, said the process improves care and directs scarce operating dollars toward the needs of patients, versus costly malpractice coverage."

Patients who want to claim malpractice by a health center must file a claim with the U.S. Department of Health and Human Services, which can make a settlement offer or deny the claim. "If the claim is denied or not settled, or a six-month review period expires, the patient may sue in federal court under the Federal Tort Claims Act," Kaiser reports.

Here's a map showing the centers' locations in Kentucky (click on it to enlarge):

Map from the Kentucky Primary Care Association; to enlarge any image, click on it.