Two months ago, state regulators accused the Phillips Eye Institute in Minneapolis of failing to properly sterilize its surgical equipment.
The investigation by the Office of Health Facility Complaints prompted the hospital to spend more than $2 million to upgrade its equipment.
But Phillips' president, David Orbuch, said that the hospital never had a problem, and that the whole thing boiled down to a dispute over which rules should apply to a specialty eye hospital.
"We have the lowest infection rates in the country," he said.
The state agency said the hospital should have used a more thorough sterilization process, which exposes surgical tools to steam heat for an hour. Instead, Phillips used what's known as "flash sterilization," which only takes 10 minutes, but requires a higher temperature.
The report said the hospital could lose Medicare funding if the problem wasn't corrected.
The report, released Feb. 4, also said the hospital failed to "comprehensively" monitor infections after surgery.
Orbuch disputed the findings, noting that most eye hospitals in the country use the same sterilization process that Phillips has used for 20 years. The standards the agency cited, he said, were designed for general hospitals, which have a greater risk of infection. "We don't believe that our sterilization process ever placed patients in any danger," he said. Phillips reported four infections in more than 10,000 surgeries in 2007.