Montana hospital pays $10M to settle kickback suit

Bozeman (Mont.) Health Deaconess Hospital paid $10 million to resolve allegations the hospital submitted fraudulent claims to government payers as part of a kickback scheme, according to the Bozeman Daily Chronicle, which cited recently unsealed court documents.

Two radiologists filed the suit nearly three years ago under the qui tam, or whistle-blower, provision of the False Claims Act. The suit, which was dismissed Oct. 31 after the settlement was reached, alleged the hospital participated in the kickback scheme to maintain a monopoly on radiology services in Gallatin County, Mont.  

The hospital had an exclusive contract for radiology services with Intercity Radiology in Bozeman. According to the lawsuit, Intercity considered opening an outpatient imaging center in Bozeman in 2002, but hospital officials convinced Intercity to abandon those plans and open a joint venture with the hospital called Advanced Medical Imaging.

The hospital was the majority owner of AMI, and Intercity allegedly paid the hospital for referrals to the imaging center. Intercity also allegedly agreed to a noncompetition clause as part of the partnership.

Although the hospital and other defendants agreed to settle the suit, they deny all allegations and do not admit any wrongdoing. Attorneys representing the hospital argued that Intercity agreed to a noncompete agreement with the hospital nearly two years before they formed AMI. Allegations that the hospital bribed Intercity to not open an outpatient imaging center were "demonstrably false," the attorneys said.

Access the full Bozeman Daily Chronicle article here.

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