Missouri Hospitals Pay $34 Million to Settle False Claims Lawsuit
Author: Marta Moakley, XpertHR Legal Editor
May 23, 2017
Two Missouri hospitals have agreed to pay $34,000,000 to settle allegations regarding False Claims Act violations, the Department of Justice (DOJ) announced. The case arose from a lawsuit filed by a whistleblower who will receive $5.4 million from the overall recovery.
The DOJ alleged that the hospitals - Mercy Hospital Springfield (formerly known as St. John's Regional Health Center) and its affiliate, Mercy Clinic Springfield Communities (formerly known as St. John's Clinic) - engaged in improper financial relationships with referring physicians over a five-year period. Specifically, physicians' compensation by the hospitals and clinics was based in part on patient referrals. Federal law restricts the financial relationships that hospitals and clinics may have with doctors who refer patients to them.
Dr. Viran Roger Holden, an employee of the one of the hospitals, filed a lawsuit under the qui tam provisions of the False Claims Act, which allow private citizens to bring suit on behalf of the government and to share in any recovery.
The hospitals did not admit liability under the settlement agreement. In addition to the monetary settlement, the hospitals entered into a five-year agreement requiring them to:
- Conduct enhanced training and education;
- Perform regular internal reviews and policy and procedure updates; and
- Implement more rigorous governance oversight structure related to physician contracting and compensation practices.
Special Agent in Charge Steven Hanson for the Department of Health and Human Services Office of the Inspector General said in a statement, "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."
Jon Swope, Regional President of Mercy Central Communities, said in a statement, "We take this situation very seriously. We made a regulatory mistake and we are working hard to make it right."
The False Claims Act is one of the federal government's most potent tools for regulating health care fraud. For the 2016 fiscal year, the DOJ announced $4.7 billion in monetary recoveries under the False Claims Act. The law has counterparts at the state and municipal level and has been used to target compliance and ethics issues in various industries throughout the nation.