Asante Health System in late October settled a lawsuit that accuses cardiothoracic surgeon Dr. Charles Carmeci of engaging in schemes to enhance his payouts through Medicare, Medicaid and TRICARE.

The lawsuit, initially brought by a whistleblower ex-employee, was joined by the federal government, which sought reimbursement for Carmeci’s fraudulent insurance billing.

The allegations of fraud came from Dr. Nicholas Engstrom, an open heart surgeon who shared a Medford practice with Carmeci between 2015 and 2021.

The federal government joined by Engstrom agreed to a $430,000 settlement regarding False Claims Act violations against Carmeci and Asante, the U.S. Attorney’s Office for the District of Oregon disclosed Tuesday.

“The settlement reached is not an admission of liability by Asante or Dr. Carmeci and both parties deny the government’s allegations,” the Portland-based attorney’s office said in a release.

A “Covered Conduct” settlement agreement is signed by Asante, Asante Physician Partners and Carmeci, according to filings in U.S. District Court.

Documents show that Engstrom feels the settlement is “fair, adequate, and reasonable” as defined by the law.

An Asante spokesperson said, “With this matter resolved, we move forward and continue to do what we do best: providing care for our communities.”

An employee in Carmeci’s office declined to comment.

News of a settlement and its newly unsealed complaint was first reported last week by The Lund Report.

The lawsuit alleges that unnecessary surgeries, described as “highly reimbursable,” led to patient harm.

The lawsuit describes a February 2020 incident where hospital risk management had to intervene while Carmeci tried to take a 60-year-old patient to the operating room. Engstrom’s complaint states that an aneurysm must be at least 5.5 centimeters before warranting surgery; the patient had a 5.1-centimeter aneurysm.

“Dr. Carmeci blamed a member of the office staff … for not showing him the CT scan,” the complaint states. Engstrom counters that the scheduler’s records “reflected that she had shown Dr. Carmeci the CT scan.”

The lawsuit and Engstrom’s claims have not led to criminal charges.

Oregon State Medical Board records show no pending or past malpractice complaints for either Carmeci or Engstrom, and searches through Oregon court records for civil lawsuits involving each doctor yielded no results.

Carmeci is still listed as an Asante cardiothoratic surgeon in Medford, where he averaged in 92 reviews a 4.88-star rating out of 5, according to an Asante web page. Engstrom now practices in Lane County.

Carmeci was the highest-paid employee at Asante Physician Partners in Medford for the fiscal year ending in September 2022 with an income of $2,108,884, according to the organization’s Form 990 accessed through ProPublica’s Nonprofit Explorer database.

Engstrom’s complaint states that his investigation into Carmeci started in 2019, when operating room nurses told Engstrom about surgical procedures that weren’t actually carried out being added to patients’ medical records.

In the latter half of 2019, someone in anesthesia told Engstrom about a case in which Carmeci billed for closing a hole between chambers of the heart, known as a “patent foramen ovale” or PFO closure, despite pre-op and intra-op ECGs showing no evidence of such a hole,” the complaint states.

“… Dr. Carmeci nevertheless charged the patient for a PFO closure,” the complaint states.

In December 2019, while Carmeci was on vacation, Engstom said he found “instances in which procedures that should never be done together were billed on the same day for the same patient,” the complaint states.

Engstrom brought fraud concerns to Asante leadership in early 2020, including a meeting with Chief Medical Officer Jamie Grebosky in which Engstrom asked for his compensation to be separated from Carmeci’s. In a follow-up meeting Jan. 21, 2020, Engstrom said he told the CMO in front of Carmeci that he believed his medical partner was “performing unindicated and unnecessary surgeries in order to increase his compensation.”

Eight days later, Engstrom sent Asante Vice President of Operations Kristi Blackhurst an email detailing some of his “observations about fraudulent billing.” He claims that the CMO and Vice President of Quality “did not address Dr. Engstrom’s concerns and instead accused Dr. Engstrom of committing HIPAA violations because he knew so much about Dr. Carmeci’s patients.”

Although the CMO and Asante’s Vice President of Quality never pursued Engstrom on claims of HIPAA violations, he felt that he was “now being targeted.”

Engstrom states Asante subjected him to “harassment and excessive scrutiny” in the form of spurious complaints — particularly after Engstrom contacted the FBI.

In January 2021, for instance, Grebosky contacted Engstrom about a weapon he kept on campus, called it an “extremely serious issue.” Engstrom said the weapon was a keepsake pocketknife given to him by a patient and engraved with the word “blessed,” which he kept in his loupe box in the operating room.

“Dr. Engstrom, who has access to and uses extremely sharp instruments supplied by his employer daily in the course of his work, was ordered to remove the pocketknife from campus,” the complaint states.

He left Asante in early 2021 and filed the sealed complaint on April 27, 2021, with the help of Eugene-based lawyers Jennifer Middleton and Caitlin Mitchell with Johnson, Johnson, Lucas & Middleton.

Middleton and Mitchell could not immediately be reached for comment.

Before Engstrom filed his complaint, he disclosed his allegations to the Centers for Medicare and Medicaid Services Office of Inspector General, the FBI and the U.S. Department of Justice, the complaint states.

The complaint’s unsealing was a settlement term dictated jointly by the U.S. Attorney’s Office and Engstrom, according to the Oct. 18 settlement agreement, which was filed by Assistant U.S. Attorney Alexis Lien.

The agreement states that documents on file “discussing the content and extent of the United States’ investigation” remain sealed.

This story has been updated to include a statement from Asante.