Two Missouri Hospitals Agree to Pay $34 Million to Settle Alleged False Claims Act Violations
Part of the government’s effort at cracking down on health care fraud involves ensuring that healthcare providers remain motivated by medical necessity when it comes to treating patients and not by profit. This idea was demonstrated this week when The Department of Justice announced that Two Southwest Missouri health care providers had agreed to pay $34 million to resolve allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians. The defendants are Mercy Hospital Springfield f/k/a St. John’s Regional Health Center and its affiliate, Mercy Clinic Springfield Communities. The defendants operate a hospital, clinic and infusion center.
The settlement resolves allegations that the health care providers submitted false claims to the Medicare Program for chemotherapy services rendered to patients referred by oncologists. The formula used in referring patients to these oncologists improperly took into account the value of their referrals to the infusion center operated by the institutions. Federal law limits the financial relationship that hospitals may have with doctors who refer patients to them. “When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”
The allegations arose from a lawsuit filed by a whistleblower, Dr. Viran Roger Holden, a physician who was employed by one of the defendants. Dr. Holden’s lawsuit was filed based on the qui tam provisions of the False Claims Act. Under these provisions, private citizens can sue on behalf of the government for false claims and share in any subsequent recovery. Dr. Holden is scheduled to receive $5,440,000 as his share of the settlement. “When physician compensation improperly accounts for referrals, patients are left to wonder whether their doctor’s judgment has been tainted and motivated by financial interests,” said Special Agent in Charge Steven Hanson for the Department of Health and Human Services Office of the Inspector General. “Illegal financial reward has no place in health care. Today’s settlement should send a message that, together with our law enforcement partners, we will pursue these cases.”
The government’s intervention in this complaint illustrates its emphasis on combating health care fraud which goes back to the previous administration. The False Claims Act is one powerful tool it uses to prosecute offenders. Tips from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477). If you have chosen to disclose wrongdoing it is also advised that you contact a whistleblower law firm. Whistleblower Medicare attorneys can advise you on such matters and will work to protect your rights under the law.