Healthcare News & Insights

Hospital chain pays $16.5 million

Be careful about the deals your facility makes with outside practices/groups. If they’re not squeaky clean, you could end up paying big like this hospital chain did.

HCA Inc., one of the nation’s largest for-profit hospital chains, has agreed to pay the federal government and the state of Tennessee $16.5 million to settle claims it violated the False Claims Act and Stark Statute.

According to the settlement agreement, HCA, through its subsidiaries Parkridge Medical Center, in Chattanooga, TN, and HCA Physician Services (HCAPS), headquartered in Nashville, TN, entered into a series of financial transactions with a physician group, Diagnostic Associates of Chattanooga.


According to the Department of Justice, HCA provided financial benefits intended to get the physician members of Diagnostic Associates to refer patients to HCA facilities. The financial transactions included rental payments by Parkridge for office space leased from Diagnostic Associates at a rate in excess of fair market value. Reason: HCA wanted to assist Diagnostic Associates members to meet a mortgage obligation and get out of a separate lease.

The Stark Statute restricts such financial relationships and federal law prohibits the payment of medical claims that result from these relationships.

A whistle blower, who conducted a fair market rent study that Darrel Moore, CEO of Parkridge signed, reported the violation. The whistle blower will get 18.5% ($3.1 million) of the settlement.

HCA also will pay $236,000 to cover the whistle blower’s attorney fees and other costs.

Corporate Integrity Agreement

As part of the settlement, and to ensure compliance with federal healthcare benefit program requirements, Parkridge has entered into a five-year Corporate Integrity Agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services (HHS).

“Improper business deals between hospitals and physicians jeopardize both patient care and federal program dollars,” said Daniel Levinson, HHS Inspector General. “Our investigators continue to work shoulder to shoulder with other law enforcement authorities to stop schemes that imperil scarce healthcare resources.”

This resolution is part of the government’s emphasis on combating healthcare fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was launched in May 2009. The initiative has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.

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