Detroit Hospital Systems Agrees to Pay More than $84 Million to Settle False Claims Act Allegations
The integrity of the health care system is again at issue as the Justice Department takes another provider to task for allegedly offering financial incentives to physicians in return for patient referrals. This happened last week when William Beaumont Hospital, based in Detroit, agreed to pay $84.5 million to resolve allegations that the regional hospital system violated the False Claims Act by engaging in improper relationships with eight referring physicians. Further the hospital is alleged to have submitted these false claims to the Medicare, Medicaid and TRICARE programs for reimbursement. The Anti-Kickback Statute, which the hospital is accused of violating, prohibits health care providers from offering, paying, soliciting, or receiving remuneration for services provided by Medicaid, Medicare and other federally funded programs. The Physician Self-Referral Law, commonly known as the Stark Law, prohibits hospitals from billing Medicare for certain services referred by physicians with whom the hospital has an improper financial arrangement. This prohibition includes the payment of compensation that exceeds the fair market value of the service rendered. Both statutes are designed to ensure that a physician’s medical judgment is not impaired by financial incentives and are indeed based solely on the patient’s medical needs.
“We are very pleased with the outcome of this case. This result should impress on the medical community the fact that we will aggressively take action to recover monies wrongfully billed to Medicare, through the remedies provided in the federal False Claims Act,” said U.S. Attorney Matthew Schneider for the Eastern District of Michigan. “I would like to commend the new leadership at Beaumont Hospital for making things right once its past wrongdoing was brought to its attention by federal investigators.” The government alleges that between 2004 and 2012, Beaumont violated the Anti-Kickback Statute and the Stark Law by submitting claims for services provided by illegally referred patients. Specifically, the settlement reached last week resolves claims that Beaumont misrepresented that a CT radiology center was qualified as an outpatient department of Beaumont. As a result of the settlement, Beaumont is slated to play $82.74 million to the government and $1.76 million to the State of Michigan.
“Health care providers that offer or accept financial incentives in exchange for patient referrals undermine both the financial integrity of federal health care programs and the public’s trust in medical institutions,” said HHS-OIG Special Agent in Charge Lamont Pugh. “Our agency will continue to protect both patients and taxpayers by holding those who engage in fraudulent kickback schemes accountable.”As one of the terms of the settlement Beaumont, must enter into a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General. The agreement requires that Beaumont must consent to an arrangement review conducted by an Independent Review Organization.
The allegations resolved by this settlement were brought about in lawsuits filed under the qui tam, or whistleblower, provision of the false Claims Act. This act permits private parties to sue on behalf of the government for false claims and to share in any recovery. Suits of this nature are usually handled by a qui tam attorney working for a whistleblower law firm. The whistleblowers share to be awarded have not yet been determined as there were several plaintiffs involved in the action against Beaumont.