In The News

Dallas-Based Hospital to Pay $7.5Million to Settle Kickback Allegations

Often it is the case that alleged violations of the False Claims Act are tied to alleged violations of the Anti-Kickback Statute as well. This was proven to be the case last week when the Justice Department announced that Pine Creek Medical Center LLC (“Pine Creek”) has agreed to pay $7.5 million to resolve allegations that it violated the False Claims Act by providing marketing services to physicians in exchange for surgical referrals. This, the government alleges, violates the Anti-kickback Statute. “Health care providers that attempt to profit from illegal kickbacks will be held accountable,” said Principal Deputy Assistant Attorney General Chad A. Readler, head of the Justice Department’s Civil Division.  “Improper financial incentives can distort medical decision making and drive up healthcare costs for federal health care programs and their beneficiaries.”

The government alleged that between 2009 and 2014 Pine Creek engaged in an illegal kickback scheme whereby it delivered to hospitals marketing and/or advertised services in exchange for those physicians referring their patients to Pine Creek. Some of the patients were Medicare and TRICARE beneficiaries. Moreover, Pine Creek is alleged to have paid for advertisements on behalf of physicians in a number of local and regional publications. These advertisements were in the form of pay-per-click campaigns, billboards, website upgrades, brochures and business cards. All of this was allegedly done in an effort to induce physicians to refer their patients to the Pine Creek facility.

“The United States Attorney’s Office, in coordination with our partners at Main Justice and HHS-OIG, have and will continue to aggressively pursue those that violate the Anti-Kickback Statute, regardless of the nature or form that the kickback takes,” said Erin Nealy Cox, the U.S. Attorney for the Northern District of Texas. “We must hold individuals and entities responsible for improperly furthering their financial interests at the expense of the federal health care programs.” As part of the settlement with the government, Pine Creek has agreed to enter into a corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG). Under the agreement, Pine Creek is obligated to undertake internal compliance reforms for the next five years.

“Hospitals that try to boost their profits by paying kickbacks to physicians will instead pay for their improper conduct,” said Special Agent in Charge C.J. Porter, Department of Health and Human Services, Office of Inspector General’s Dallas Region. “We will continue to investigate such illegal business arrangements that undermine impartial medical judgment.” The settlement resolves allegations that were originally brought about in a lawsuit filed by whistleblowers under the qui tam provisions of the False Claims Act. These provisions allow private parties to sue on behalf of the government for false claims and to share in any recovery. The whistleblowers, Suzanne Scott and Savannah Sogor, former employees of the Pine Creek’s marketing department, will receive $1,125,000.