Hospital Chain HCA Inc. Pays $16.5 Million to Settle False Claims Act Allegations Regarding Chattanooga, Tennessee Hospital
Back in 2012 HCA Inc., agreed to pay the United States and the state of Tennessee $16.5 million to settle claims that it had violated the False Claims Act and the Stark Statute. At the time, the Justice Department alleged that during 2007 HCA – through its subsidiaries Parkridge Medical Center and HCA Physician Services – entered into a series of transactions with Diagnostic Associates of Chattanooga (DCA) for which it provided financial benefits to DCA for referring its patients to HCA-owned facilities. These financial transactions included rental payments for office space leased from Diagnostic at a rate in excess of fair market value. The government further alleged that this was done in order to help DCA members meet their mortgage.
The government alleged that these transactions violated the Stark Statue (42 USC § 1395nn) which prohibits physician referrals of designated health services for Medicare and Medicaid patients if the physician (or an immediate family member) has a financial relationship with that entity. “Physicians should make decisions regarding referrals to health care facilities based on what is in the best interest of patients without being induced by payments from hospitals competing for their business,” said Bill Killian, U.S. Attorney for the Eastern District of Tennessee.
Current Status: As of 2015 the case – United States ex rel. Thomas Bingham v. HCA, Inc., No. 1:13-cv-23671 (S.D. Fla.) – remained open and unsealed in part. The civil settlement resolved the lawsuit, under the qui tam, or whistleblower, provisions of the False Claims Act, which allows private citizens to file a qui tam lawsuit on behalf of the United States and share in any recovery as a “False Claims Act whistleblower in the case was scheduled to receive an 18.5% share of that amount.
Also as part of the settlement, Parkridge Medical Center entered into a comprehensive five-year agreement with the U.S. Department of Health and Human Services to ensure its continued compliance with federal health care benefit program requirements. This resolution is part of the government’s emphasis on combating health care fraud which was announced by then Attorney General Eric Holder and Kathleen Sebelius, former Secretary of the Department of Health and Human Services back in May 2009.