Missouri Hospitals Agree to Pay $34M Settlement to U.S.

Public Health Watchdog Breaking News
Public Health Watchdog Breaking News

The Justice Department announced on May 18, 2017, that two Southwest Missouri health care providers have agreed to pay the United States $34 million to settle allegations that they violated the False Claims Act by participating in improper financial relationships with referring physicians. The hospitals in question are Mercy Hospital, formerly known as, St. John’s Regional Health Center, and its affiliate, Mercy Clinic Springfield Communities, formerly known as St. John’s Clinic. Among other health care facilities, the health care providers operate a hospital, clinic, and infusion center in Springfield, Missouri.

False Claims to Medicare

The lawsuit was based on allegations of an improper financial relationship between health care providers and some patient referrals.

The settlement concerned allegations that false claims to the Medicare Program for chemotherapy services rendered to patients had been submitted. These services were referred by oncologists whose compensation was partially based on a formula that improperly took into account the value of their referrals of patients to the infusion center operated by the health care providers. There is a federal law that restricts the financial relationships that hospitals and clinics may have with doctor who refer patients to those facilities, according to the Department of Justice (DOJ).

“When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

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Whistleblower Allegations

The claims settled in this case arose from a lawsuit filed by Dr. Viran Roger Holden, a physician who was employed by one of the Missouri health care providers, under the qui tam provisions of the False Claims Act. Private citizens can bring suit under the False Claims Act, on behalf of the government for false claims and share in any recovery. The Department of Justice investigated Dr. Holden’s allegations and chose to intervene in the case, effectively taking over the prosecution. Dr. Holden will receive $5.44 million of the total recovery as a whistleblower reward.

“This settlement protects patients and the public by enforcing the federal protections against profit incentives for physicians,” said Acting U.S. Attorney Thomas M. Larson for the Western District of Missouri. “Patients deserve assurances that they are receiving appropriate medical care, unbiased by hidden incentives. And taxpayers deserve assurances that the cost of public health care programs is not inflated by unnecessary procedures and services.”

“When physician compensation improperly accounts for referrals, patients are left to wonder whether their doctor’s judgment has been tainted and motivated by financial interests,” notes Special Agent in Charge Steven Hanson for the Department of Health and Human Services Office of the Inspector General. “Illegal financial reward has no place in health care. Today’s settlement should send a message that, together with our law enforcement partners, we will pursue these cases.”

The government’s intervention and criticism in this matter illustrates the government’s emphasis on fighting health care fraud. One of the strongest tools in this effort is the False Claims Act. It is important for the public to be alert to all forms of potential fraud, waste, abuse, and mismanagement in health care.

The False Claims Act is a federal statute setting criminal and civil penalties for falsely billing the government, over-representing the amount of a delivered product, or under-stating an obligation to the government. The False Claims Act may be enforced either by the Justice Department or by private individuals in a qui tam proceeding. In a qui tam action, a private party called a relator, brings an action on the government’s behalf. The government, not the relator, is considered the real plaintiff. If the government succeeds, the relator receives a share of the award. This is also called a popular action.

Legal Advice and Information Involving Health Care Concerns

If you or someone you know has been involved in allegations of potential fraud, abuse, or mismanagement in health care, you may have valuable legal rights. Parker Waichman LLP offers free, no-obligation case evaluations. We urge you to contact the personal injury lawyers at 1-800-YOURLAWYER (1-800-968-7529).