Just Before Trial Begins, Halifax Health Settles First Part of Fraud Case

Daytona, Beach. Fla.-based Halifax Health settled the first portion of a whistle-blower suit today just as its trial was slated to begin in Orlando, according to an Orlando Sentinel report.

Neither Halifax nor the U.S. Department of Justice would disclose the monetary amount of the settlement, but a "source close to the case" said the amount was near $85 million, according to the report.

The qui tam suit was brought by Elin Baklid-Kunz, who currently works at Halifax as director of physician services, in 2009. It accuses the public system of allegedly inappropriately admitting patients, allegedly billing Medicare for their services and having financial relationships with physicians that allegedly violated federal anti-kickback laws. The suit alleges the fraudulent billings spanned more than a decade.

The DOJ joined the case in October 2011, supporting some of the allegations.

Because of the complexity and breadth of the lawsuit, U.S. District Judge Gregory Presnell agreed to split the case into two trials, according to the report. The one beginning Monday was to be focused on bonuses paid to six of the Halifax Health Medical Center's oncologists and on the alleged excessive compensation paid to three of its staff neurosurgeons.

Before a jury was seated for the hearing Monday, however, Halifax and the prosecutors agreed in principle that Halifax would pay the settlement amount plus attorneys' fees to resolve the allegations. Judge Presnell agreed to the settlement.

Potential damages and penalties in the suit were expected hit $1 billion, making it one of the largest Medicare fraud cases of its kind and one closely watched by hospitals and legal experts. Even a $90 million settlement is far less than the more than $400 million the government was seeking for the allegations involved in the first trial.  

Last November, Judge Presnell ruled on one piece of the suit, finding Halifax's contracts with six oncologists violated Stark law. The ruling carries a minimum penalty of $27 million. During the trial, the jury was to decide whether the hospital knew it was breaking the law when it paid the bonuses. If the jury decides the hospital knew, the $27 million damages would triple to more than $80 million, not including penalties, according to the report.

Also during the first trial, the jury was slated to hear arguments about three neurosurgeons who were each paid between $1 million and $2 million per year. The government claims those compensation packages were excessive, but Halifax contends they fell "within fair market value" considering the importance of neurosurgery in the Daytona market, according to the report.

The government claims that the neurosurgeons' false claims exceed $37 million. Those damages would near $111 million if the jury found the hospital knew it was breaking the law, according to the report.

On top of that, for every patient referred to the hospital who shouldn't have been, the hospital would be fined an additional $5,500 to $11,000 for each instance under the False Claims Act.

The second trial is scheduled for July. That trial will focus on allegations that for more than a decade the hospital made a practice of admitting patients to the hospital who didn't need to be admitted, then billed government payers for their care. That part of the case could result in damages plus penalties that could reach $400 million, according to the report.

More Articles on Halifax Health:
Potential Damages in Halifax Health Lawsuit Could Hit $1B
Halifax Health's Legal Fees Hit $21M Mark
Judge: Halifax Violated Stark Law With Bonuses to Oncologists


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