Healthcare News & Insights

Ohio Hospital pays $8.5M to settle False Claims Act Allegations

The Justice Department is firmly committed to making sure that all healthcare providers and hospitals follow the rules. And if you don’t believe it, just ask Memorial Hospital. 

Doctor with dollar billsThe Ohio nonprofit corporation that operates an acute care hospital in Fremont is paying $8.5 million to resolve allegations it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute by engaging in improper financial relationships with referring physicians.

The Anti-Kickback Statute and the Stark Statute restrict the financial relationships that hospitals may have with doctors who refer patients to them. This settlement involved allegations that Memorial had illegal financial relationships with two physicians:

  • a joint venture between Memorial and a pain management physician, and
  • an arrangement under which an ophthalmologist purchased intraocular lenses and then resold them to Memorial at inflated prices – violated statutory requirements.

“Physician referrals should be made exclusively based on what’s best for the patient, not on financial relationships,” said Steven Dettelbach, U.S. attorney for the Northern District of Ohio. “We hope that this settlement will once again help drive that message home.”

Financial relationships

The improper referrals at issue in this matter included Medicaid patients.  And since Medicaid is funded jointly by the states and the federal government, the state of Ohio will receive $600,383 of the settlement amount. “Improper financial relationships between healthcare providers and their referral sources can undermine physicians’ judgment about patients’ true healthcare needs and drive up healthcare costs for everyone,” said Stuart Delery, assistant attorney general for the Justice Department’s Civil Division. 

Healthcare fraud

This settlement illustrates the government’s emphasis on combating healthcare fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. Since January 2009, the Justice Department has recovered a total of $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal healthcare programs.

While the claims settled by this agreement are allegations only, and there has been no determination of liability, HEAT is happy that Memorial stepped forward and disclosed the improper financial relationships and is working to resolve the matter.

Self-disclosure of such matters is always a facility’s best bet, as the government sees it as an act of good faith and goes a little bit easier on the facility. Just think what the penalty would have been otherwise.

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