By Chris Duncan
The Associated Press

LOUISVILLE, Ky. - Lt. Gov. Steve Henry settled a federal lawsuit Tuesday that accused him of defrauding Medicaid and Medicare programs while he was teaching at the University of Louisville Medical School.

Henry has agreed to pay the federal government $162,000 to settle the charges contained in the suit, filed in November.

"The settlement also includes the recovery of money that belongs to the Medicaid and Medicare programs and the imposition of a significant financial sanction," according to a statement from the U.S. Attorney's Office in Louisville. Federal prosecutors said they reached the deal Tuesday morning.

"Through this settlement, we hope to send a message that false claims submitted to Medicaid and Medicare will not be tolerated," said Assistant U.S. Attorney Bill Campbell.

Henry, an orthopedist, was accused of billing the health programs for surgeries that he did not supervise, or for which he was not "immediately available," Campbell said. The lawsuit cited 44 separate misbillings from October 1996 to February 2001.

Campbell said in all 44 instances, Henry was not in the building where the surgeries were taking place.

"'Immediately available' means the attention needs to be focused on the surgery at hand," Campbell said. "The vast majority, (Henry) was not in town."

Henry denied criminal wrongdoing, saying the settlement was a matter of convenience.

"If it was fraud, why didn't they take it to the court system? If I had done anything wrong, why didn't they take it before a jury?" Henry said after the settlement was announced. "The fact is, they would've lost. It is not worth two years of my time and $250,000 in legal fees to put my family through."

Federal officials said Henry defrauded the government of $60,378.49, in violation of the False Claims Act.

In most of the cited incidents, the lawsuit alleged Henry was not present during the surgeries because he was attending political functions.

Henry countersued, saying he signed billing forms only after university employees verified he was present for the procedures. Henry also had denied actively submitting claims to Medicaid or Medicare, saying he relied on the university to handle billing.

Henry admitted he left the hospital on some occasions to attend political events, but claimed billing was made only for portions of procedures he oversaw.

Henry's attorney, Bixler Howland, said the case stemmed from mistakes made by Henry's subordinates. Medical claim forms "were submitted, but he didn't submit them," Howland said.