10 Big Anti-Kickback and Stark Cases Involving Hospitals in 2010

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Here are ten big anti-kickback statute and Stark law cases involving hospitals that made headlines in 2010.

1. Former owners of Los Angeles-based City of Angels Medical Center pay $10 million for paying illegal kickbacks — In January, Robert Bourseau and Rudra Sabaratnam, MD, pleaded guilty to their roles in a scheme to pay patient recruiters illegal kickbacks for the recruitment of homeless patients. The recruited homeless patients underwent a variety of medical treatments, many of which were not medically necessary and were billed to federal healthcare programs.

2. Christiana Care Health System in Wilmington, Del., agreed to pay $3.3 million to settle a whistleblower kickback lawsuit
— In March, the health system agreed to pay $3.3 million to settle kickback allegations. According to the charges, Christiana Care overpaid physicians at Neurology Associates for in-hospital readings of EEGs allegedly as a "reward" for referring patients to the hospital. The court documents note the payments were part of a contract dating to 1989, prior to the enactment of the current Stark Act and Delaware Anti-kickback Statute. Christiana Care said they put the contract out for rebid in 2003, when it terminated Neurology Associates' contract under the Stark Act, but the practice won the contract back in 2003. The health system denied any wrongdoing in the case.

3. Tuomey Hospital in Sumter, S.C., pays $49.4 million for violating Stark Act — In April, a federal jury ruled Tuomey Hospital violated Stark Act in regards to employment contracts it held with physicians at its Outpatient Surgery Center. Federal prosecutors also alleged Tuomey violated the False Claims Act by submitting claims resulting from referrals that violated self-referral law, but the jury dismissed this claim, clearing the hospital of Medicare fraud charges. The health system has since appealed the judgment that awarded the government money for its equitable claims, arguing the system's behavior was consistent with guidance by CMS for complying with Stark Law. The American Hospital Association has joined in Tuomey's cause by filing an amicus brief in support of the health system.

Correction: A previous version of this story suggested that Tuomey Hospital was accused of paying kickbacks to physicians. The hospital has never been accused of violating the Anti-Kickback statute or providing kickbacks to physicians.
Becker's Hospital Review regrets this error.

4. Health Alliance of Greater Cincinnati and The Christ Hospital in Mount Auburn, Ohio, pay $108 million to settle accusations they violated the anti-kickback statute and the False Claims Act — In May, the organizations were accused of illegally paying physicians in exchange for referring cardiac patients to The Christ Hospital, a former member hospital of the Health Alliance of Greater Cincinnati. The Christ Hospital allegedly limited the opportunity to work at the Heart Station — a center where patients receive non-invasive procedures such as electrocardiograms and stress tests — to those cardiologists who referred cardiac business to The Christ Hospital. Cardiologists were also allegedly rewarded with a percentage of time at the Heart Station based on their contributions to the hospital's yearly gross revenues, and these physicians could earn additional income for treating patients at the facility.

5. St. Jude Medical, Parma (Ohio) Community General Hospital and Norton Healthcare in Louisville, Ky., settle false claims allegations for $3.9 million — The heart device manufacturer was accused of paying kickbacks to the two hospitals in order to obtain heart-device business. The illegal kickbacks allegedly included retroactive rebates that were paid based on the hospital's previous purchases of St. Jude heart devices and rebates to induce future purchases of devices from St. Jude. In June, it was agreed that St. Jude will pay $3.725 million. Parma Community and Norton will pay $40,000 and $133,300, respectively.

6. Physician-owned lithotripsy provider reaches $7.3 million settlement in anti-kickback lawsuit — In July, Chicago-based United Shockwave Services, United Prostate Centers and United Urology Centers entered into a $7.3 million settlement with the OIG to resolve allegations of soliciting and receiving payments from hospitals in exchange for patient referrals. Specifically, OIG alleged that United, and some of its physician-owners, leveraged patient referrals to obtain contract business from hospitals in Illinois, Indiana and Iowa and caused certain hospitals to submit claims for designated health services as a result of the prohibited referrals.

7. Health Management Associates files motion to dismiss lawsuit alleging kickbacks and false claims
— Mike Mastej, former CEO of Physicians Regional Medical Center in Naples, Fla., filed a whistleblower suit against HMA, alleging the hospital operator provided kickbacks to physicians for referrals in the form of on-call payments, reduced or free office space rentals and trips to the Masters Golf Tournament and then billed Medicare for services from these physicians. In September, HMA argued the lawsuit failed to provide enough evidence to prove any false claims or anti-kickback violations. The Department of Justice initially investigated the original whistleblower case but chose not to intervene. Scott Becker, JD, CPA, a partner at McGuireWoods, said the success of qui tam lawsuits is much lower when the government chooses not to intervene.

8. Marion (Ohio) General Hospital pays $1.2 million to resolve allegations of Stark law and anti-kickback violations — The violations, which were self-reported by the hospital in October to the U.S. Attorney General's Office, included a number of financial relationships with physicians that did not involve a written contract. Specifically, the hospital provided an after-hours answering service and medical waste disposal services to independent physicians at below-market rates and provided payment without a written contract to independent physicians who treated uninsured patients, among other violations.

9. Towson, Md.-based St. Joseph Medical Center pays $22 million to resolve lawsuit involving alleged False Claims Act and anti-kickback violations — The November settlement resolves allegations of the payment of kickbacks to Pikesville, Md.-based MidAtlantic Cardiovascular Associates under the guise of professional services agreements in return for the group's referrals to the medical center. The settlement specifically resolves issues related to 11 professional services agreements, covering the period of Jan. 1, 1996 to Jan. 1, 2006, which were being investigated for being above fair market value, not commercially reasonable or for services not rendered.

10. Bradford (Penn.) Regional under fire for allegedly violating the anti-kickback statute — In November, a federal judge found BRMC guilty of violating the federal Stark Act by entering into an illegal financial relationship with two physicians and their medical practice and submitting claims to Medicare based upon referrals from them. According to the prosecution, a lease agreement between the hospital and the two physicians was not a bona fide sublease of equipment needed by the hospital, which already had its own nuclear camera, but was instead a disguised attempt to pay the physicians for patient referrals. A jury must decide whether the defendants possessed the necessary intent to be liable under the anti-kickback statute. While no decision has yet been made as to whether BRMC indeed violated the anti-kickback statute, the presiding judge in the Stark Act case stated the hospital will find it difficult to prove they did not possess intent.

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