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MediSys Health Network Inc. Agrees to Pay $4 Million to Resolve Alleged False Claims Act Violations

The government’s pursuit of health care providers who engage in improper relationships with referring physicians continues unabated by the change of administrations. Proof of this came last week when the Justice Department announced that New York Hospital operator MediSys Health Network Inc., (MHNI) has agreed to pay $4 million to settle allegations that it violated the False Claims Act by providing improper payments to referring physicians. MHNI operates Jamaica Hospital Medical Center and Flushing Hospital and Medical Center in Queens, New York. The settlement resolves allegations that the defendants submitted false claim to Medicare and that they did not comply with the requirements of the Stark Law (42 U.S. Code § 1395nn). The Stark law prohibits physicians from referring Medicare patients to entities with which they may have a financial relationship. The relationships that the defendants are accused of having with physicians took the form of office lease arrangements and compensation.


“This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physician’s medical judgment, to the detriment of patients and taxpayers,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “When hospital operators provide financial incentives to doctors for patient referrals, individuals rightfully wonder whose best interests are being served,” said Special Agent in Charge Scott J. Lampert for U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We will continue to investigate such entities who fraudulently bill government health programs.”


The lawsuit was filed by Dr. Satish Deshpande under the qui tam, or whistleblower, provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. Dr. Deshpande will receive $600,000 as his share of the recovery.  The case, United States ex rel. Deshpande, et al. v. The Jamaica Hospital Medical Center, et al., Case No. 13-cv-4030 (E.D.N.Y.), was handled by Senior Trial Counsel David T. Cohen of the Civil Division’s Commercial Litigation Branch, Assistant U.S. Attorney Kenneth M. Abell of the U.S. Attorney’s Office for the Eastern District of New York and Associate Counsel David Fuchs from HHS-OIG.