Bradley attorney Travis Lloyd was quoted in Healthcare Risk Management on a $50 million settlement by a West Virginia hospital where the Department of Justice (DOJ) alleged that the hospital systematically violated the Stark Law and Anti-Kickback Statute by knowingly paying improper compensation to referring physicians above fair market value. A former executive vice president filed a whistleblower complaint under the qui tam provisions of the False Claims Act (FCA), which allow individuals to bring a lawsuit on behalf of the government and share in the proceeds. The employee had expressed concerns about the arrangement and then was fired for not cooperating with it, according to the DOJ. The whistleblower will receive $10 million of the $50 million settlement.
This settlement is among the pantheon of recent significant settlements with hospitals concerning alleged FCA violations predicated on violations of the Stark law and the AKS, said Lloyd. It reflects the government’s continued emphasis on combatting healthcare fraud. It is yet another reminder to hospitals of the importance of structuring physician compensation arrangements in a manner that is consistent with fair market value and does not take into account, directly or indirectly, the volume or value of physician referrals, he added.
The alleged misconduct in this case is fairly straightforward, Lloyd explained. Among other things, the hospital allegedly paid physicians far in excess of fair market value and tied incentive compensation to the net revenue attributable to physicians, including technical fees billed by the hospital in connection with the physicians’ services.
Two features of the settlement stood out to Lloyd. First, the hospital was not required to enter into a corporate integrity agreement in connection with the settlement — a difference from prior settlements concerning similar allegations. This likely reflects the fact that a new operator took over the management of the hospital shortly after the government intervened in the case, he said.
“The case also is remarkable for the fact that the defendant hospital filed a countersuit against the relator, a former executive vice president of the hospital, in which it alleged that the relator breached his fiduciary duty to the hospital by not reporting and attempting to prevent the misconduct in the qui tam action,” he said.
The original article, “$50 Million Stark Settlement Shows Risk of Violation, Whistleblowers,” appeared in the November 2020 issue of Healthcare Risk Management.