Tenet, Detroit Medical Center, Vanguard Health pay $29M settlement in alleged kickback scheme

Dallas-based Tenet Healthcare, Detroit Medical Center and Vanguard Health Systems have agreed to pay $29.7 million to the federal government to resolve a whistleblower's allegations that they violated the False Claims Act by providing kickbacks to referring physicians.

Six things to know:

1. DMC operates eight hospitals in the Detroit area. In 2013, Tenet acquired Vanguard owned-and-operated hospitals and outpatient facilities — including DMC — for $4.3 billion.

2. From Jan. 1, 2014, through Dec. 31, 2017, prosecutors alleged that Sinai Grace Hospital and Harper University Hospital, part of DMC, provided the services of DMC-employed mid-level practitioners to 13 physicians at no cost or below fair market value in violation of the Anti-Kickback Statute.

3. According to the Justice Department, the physicians were selected because of their large number of referrals to the two hospitals and the arrangements were allegedly used to induce the physicians to refer more Medicare patients to DMC facilities.

4. The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare and other federally funded programs. The statute is designed to ensure providers' judgments are based on the best interests of their patients and not compromised by improper financial incentives.

5. The settlement resolves allegations brought under the whistleblower provisions of the False Claims Act by Jay Meythaler, MD, a former employee of Wayne State University Medical School, which is affiliated with DMC. Dr. Meythaler will receive $5.2 million as part of the settlement.

6. The settlement is not an admission of any wrongdoing by Tenet, DMC or Vanguard. "Once we became aware of the allegations, Tenet and DMC fully cooperated with the government throughout its investigation," a Tenet spokesperson told Becker's. "The matter was resolved fully to avoid the expense and operational distraction. We remain committed to full compliance with all state and federal healthcare program requirements and providing high-quality care to serve our community."

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