Pittsburgh-Area West Penn Allegheny Health System Settles False Claims Act Case

In a recent settlement involving the False Claims Act’s anti-kickback provisions and the federal Stark Law, Pittsburgh’s West Penn Allegheny Health System has agreed to pay $1.5 million to settle claims it engaged in an unlawful exchange of benefits with Pittsburgh-area doctors and facilities. The case was handled by the U.S. Attorney’s Office for the Western District of Pennsylvania and came about presumably due to the disclosure of information by whistleblowers with knowledge of the situation. Documents relating to the case, including the settlement agreement, remained sealed from public viewing.

Details of Case Against West Penn Allegheny

According to reports, the case against West Penn Allegheny evolved after it was revealed that the hospital chain was renting office space to private physicians at rates well below fair market value. Interestingly, West Penn self-reported the arrangement to authorities at the U.S. Attorney’s Office, prompting an investigation into the propriety of the arrangement.

Under the federal Stark Law, it is unlawful for physician referrals to contain a “taint” of financial self-interest. Patients are to feel secure in the notion that any referral made by their private physician is done so in the patient’s best interests and not pursuant to a referral agreement or quota to be met. Kickbacks for referrals are considered a violation of this law and could result in significant liability.

The False Claims Act similarly disallows this type of practice when it involves patients receiving Medicare or Medicaid benefits. In essence, the federal government views illegal kickbacks as a tainted referral and any charges stemming therefrom are not reimbursable by Medicaid and Medicare. Should the doctor or facility attempt to seek reimbursement for patient services rendered pursuant to an unlawful kickback scheme, both could face treble damages for each violation.

The bulk of the unlawful transactions occurred between 2008 and 2012. The hospital chain was since purchased by Highmark, Inc. after it experienced significant financial trouble.

In a statement made on behalf of West Penn, Dan Laurent said:

“Allegheny Health Network has a robust compliance program to ensure that the organization is acting in accordance with all regulations, to promptly identify potential problems and to implement corrective measures when necessary….Our actions leading to the settlement reflect how seriously we take our compliance responsibilities and the diligence with which we monitor and fulfill those obligations.”

Reporting Unlawful Kickbacks and Referral Arrangements

The False Claims Act provides incentives to whistleblowers willing to come forward to report unlawful arrangements like that described above. Whether you are a physician, patient, or someone with personal knowledge of the situation, you could stand to gain up to 30 percent of the amount the government recovers through a settlement or verdict. Under the FCA, original information is that which has not already been publicly revealed through court documents or other public investigations.

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