Judge: Halifax Didn't Violate Anti-Kickback Statute With Physician Bonuses

A federal judge has ruled that Halifax Hospital Medical Center in Daytona Beach, Fla., did not violate the Anti-Kickback Statute through its bonuses to physicians, according to a Law360 report.

However, District Court Judge Gregory A. Presnell did say Halifax still must face claims that it admitted Medicare patients for unnecessary overnight stays, according to the report.

In his partial summary judgment, Judge Presnell found expert reports cited by the whistleblower to provide "sufficient evidence to establish the existence of a genuine issue of material fact as to the medical necessity of at least some of the admissions at issue," according to his order. The whistleblower, Elin Baklid-Kunz, claims Halifax physicians regularly admitted patients for one or two days, even when those patients did not meet the medical criteria for admission, according to the order.

The judge struck down claims made by Ms. Baklid-Kunz alleging that Halifax's bonuses to physicians violated the Anti-Kickback Statute of the False Claims Act, saying the allegations failed to establish that physicians did not fall under the statute's bona fide employment exception.  

The bonuses in question are one component of a 2009 whistleblower lawsuit filed by Ms. Baklid-Kunz, who currently works at Halifax as director of physician services. The Department of Justice joined the case in 2011, supporting some of Ms. Baklid-Kunz's allegations against the public health system. The DOJ intervened on the claims that Halifax's financial relationships with certain oncologists and neurosurgeons violated Stark, and that claims submitted for referrals made by those physicians violated the FCA. In November, Mr. Presnell issued a summary judgment in favor of the federal government, finding that Halifax bonus arrangement with oncologists violated Stark law.

The judge's most recent partial summary judgment pertains to allegations that Halifax violated the AKS by paying neurosurgeons, oncologists and psychiatrists for referrals.

Stark law and the AKS both provide for a bona fide employment exception, but their requirements differ. Under AKS, prohibitions against providing compensation in exchange for referrals shall not apply to "any amount paid by an employer to an employee (who has an employment relationship with such employer) for employment in the provision of covered items or services."

The judge rejected Ms. Baklid-Kunz's argument that the physicians were independent contractors of Halifax, rather than employees, saying none of her arguments were convincing.

"All of relator's arguments stem from the fact that the physicians at issue were (at least technically) employed by Halifax Staffing rather than Halifax Hospital," Mr. Presnell wrote. But he said "it is undisputed that Halifax Staffing is merely an instrumentality and alter ego of Halifax Hospital," established to move employees from the Florida state retirement system into a self-funded retirement program.   

More Articles on Halifax:

Whistleblower Attorneys Claim Halifax Health Destroyed Records
Potential Damages in Halifax Health Lawsuit Could Hit $1B
Judge: Halifax Violated Stark Law With Bonuses to Oncologists

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