Kusserow’s Corner: Recent Enforcement Actions Against Hospitals

Memorial Hospital in Ohio has agreed to pay $8.5 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute, and the Stark Statute by engaging in improper financial relationships with referring physicians, the Justice Department announced today. Memorial had financial relationships with two physicians—a joint venture between Memorial and a pain management physician and an arrangement under which an ophthalmologist purchased intraocular lenses and then resold them to Memorial at inflated prices—violated statutory requirements. These issues were disclosed to the government by Memorial.

Halifax Hospital Medical Center, a hospital system based in the Daytona Beach, Fla., area, have agreed to pay $85 million to resolve allegations that they violated the False Claims Act by submitting claims to the Medicare program that violated the Physician Self-Referral Law, commonly known as the Stark Law. Halifax violated the Stark Law by executing contracts with six medical oncologists that provided an incentive bonus that improperly included the value of prescription drugs and tests that the oncologists ordered and Halifax billed to Medicare. Halifax further violated the Stark Law by paying three neurosurgeons more than the fair market value of their work. The settlement announced today stems from a whistleblower complaint filed by an employee of Halifax Hospital, who will receive $20.8 million of the settlement.

The government has intervened in eight False Claims Act lawsuits against Health Management Associates Inc. (HMA) alleging that HMA billed federal health care programs for medically unnecessary inpatient admissions from the emergency departments at HMA hospitals and paid remuneration to physicians in exchange for patient referrals. The government also has joined in the allegations in one of these lawsuits that Gary Newsome, HMA’s former CEO, directed HMA’s corporate practice of pressuring emergency department physicians and hospital administrators to raise inpatient admission rates, regardless of medical necessity. HMA operates 71 hospitals in 15 states: Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, Missouri, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Washington and West Virginia.

The government also intervened in a False Claims Act lawsuit against Tenet Healthcare Corp. (Tenet) and four of its hospitals in Georgia and South Carolina, as well as a hospital in Monroe, Ga., owned by Health Management Associates Inc. (HMA), alleging that the hospitals paid kickbacks to obstetric clinics serving primarily undocumented Hispanic women in return for referral of those patients for labor and delivery at the hospitals. The hospitals then billed the Medicaid programs in Georgia and South Carolina for the services provided to the referred patients and, in some instances, also obtained additional Medicare reimbursement based on the influx of low-income patients. Tenet and HMA are two of the largest owner/operators of hospitals in the United States. HMA was acquired by Community Health Systems last month. The government also is intervening against the clinics and related entities known as Hispanic Medical Management d/b/a Clinica de la Mama.

The former Madison Parish Hospital administrator in Louisiana and two of its vendors were sentenced for health care fraud after pleading guilty.

Saint Joseph Health System, Inc., d/b/a Saint Joseph London Hospital (“Saint Joseph”) in Kentucky has agreed to pay the U.S. Government $16.5 million to resolve civil allegations that it submitted false or fraudulent claims to the Medicare and Kentucky Medicaid programs for a variety of medically unnecessary heart procedures. According to the settlement agreement, the U.S. Government contends that from January 1, 2008 until August 31, 2011, several doctors working at the hospital performed numerous invasive cardiac procedures on Medicare and Medicaid patients who did not need them. The hospital then billed the federal programs for these unnecessary procedures, which include coronary stents, pacemakers, coronary artery bypass graft surgeries (“CABGS”), and diagnostic catheterizations.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.