A regional hospital system based in the upper Midwest has agreed to settle a whistleblower lawsuit for $84.5 million. The allegations arose before the healthcare organization was formed — new management took over after the merger that created the new organization. However, as a successor business, the regional hospital system has agreed to make things right.
Stark Law and Anti-Kickback violations at the core of the allegations
The lawsuit alleged that the hospital system violated the Stark Law and the Anti-kickback statutes, and then submitted false claims to several government healthcare programs. The hospital system had made improper arrangements with eight physicians to induce referrals, according to the Department of Justice. Federal law prohibits healthcare organizations from compensating doctors to obtain referrals.
The lawsuit says that the physicians were paid excessive compensation packages and provided with staff and facilities at costs below the fair market rate. The hospital system received benefits from the unlawful financial arrangements with the physicians. The doctors referred patients to the hospital system, then unfairly billed Medicare, Medicaid, Tricare and similar government programs for reimbursement for services provided.
Several individuals brought forward evidence of false claims
Several individuals filed lawsuits on behalf of the government, dating back to 2010. The False Claims Act allows private individuals to bring claims seeking recovery of taxpayer money that was obtained through fraudulent practices. Because federal law prohibits a variety of unfair financial arrangements with doctors to induce referrals, private individuals may raise these issues on behalf of the government. A recent DOJ press release says that the government has not yet determined what compensation the four whistleblowers who came forward will receive. In general, whistleblowers receive a percentage of any recovery obtain through settlement or verdict.
A spokesperson for the DOJ commends the new management of the hospital system for their involvement in the investigation and resolution of the claims. The hospital system does not admit responsibility or wrongdoing in the settlement.