EmCare Inc. (EmCare) and Physician’s Alliance Ltd (PAL) Agree to Pay More than $33 Million to Resolve Stark Law Violations
The government has demonstrated once again that it will not tolerate physicians who make medical decision based solely on financial considerations. This was illustrated when the Department of Justice announced earlier this month that two physician’s groups – EmCare Inc. and Physician’s Alliance Ltd (PAL) – have agreed to pay $29.6 million to resolve allegations that from 2008 through 2012 the companies referred patients to hospitals owned by Health Management Associates (HMA) in exchange for remuneration. The companies are alleged to have recommended that patients be admitted to HMA-run hospitals on an inpatient basis when they should have been admitted on an outpatient basis only. Medicare pays three times as much for inpatient submissions as it does for outpatient care. As part of the scheme, HMA is alleged to have made certain bonus payments to EmCare Emergency Department (ED) physicians and tied EmCare’s retention of existing contracts to increased admissions of patients who came to the ED.
In a separate agreement, three PAL executives have agreed to resolve allegations that from 2009 until 2012, the company accepted illegal remuneration from HMA to refer patients to two HMA hospitals. Under the terms of the agreement, PAL and its executives will have to pay $4 million plus interest of proceeds from the sale of PAL’s interest in a joint venture with HMA. “These settlements demonstrate our commitment to ensuring that physician judgment is not compromised by illegal inducements,” said Acting Assistant Attorney General for the Justice Department’s Civil Division, Chad A. Readler. “Patient care decisions should be based on the needs of patients rather than the financial interests of physicians.”
Under the terms of the settlement, Envision Healthcare Corporation (Envision) has entered into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General. EmCare is a subsidiary of Envision. “This settlement is a direct result of the FBI’s dedication to hold companies accountable for their role in healthcare fraud and abuse, and it would not have been possible without the teamwork between FBI Atlanta, the FBI Headquarters’ Major Provider Response Team, DOJ, and our partners,” said FBI Assistant Director Stephen E. Richardson. “Since 2011, the FBI and our partners have returned over $1.25 billion to private and public healthcare programs from these “whistleblower” investigations. The FBI is committed to safeguarding the public’s trust in a health care system that places patient care, not financial gain, as their primary focus.”
The EmCare settlement was reached as a result of a qui tam lawsuit which was filed by Drs. Thomas Mason and Stephen Folstad. Under the qui tam provisions of the False Claims Act private individuals are able to sue on behalf of the government for false claims and to share in any recovery. Drs. Mason and Folstad will receive more than $6 million. In a separate action, two former HMA executives filed suit in court alleging that a scheme between PAL and HMA existed. The two executives’ share of the settlement has not been determined.