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July 17, 2013 Healthcare Fraud

DOJ Joins False Claims Act Suit Against Infirmary Health System

The government continues to show its resolve when it comes to False Claims Act violations, taking a special interest in healthcare fraud cases. This is especially true for cases that involve Medicare fraud, violations of the Medicare/Medicaid Anti-Kickback Statute (which prohibits the payment of kickbacks in exchange for referrals) and the Stark Law (which prohibits referrals that are based on the payment of compensation).

Both the Anti-Kickback Statute and the Stark Law are designed to protect the integrity of the entire healthcare system, working to ensure that physicians make treatment decisions that are based solely on the medical needs of the patient, rather than the illegal kickbacks that a doctor stands to gain. Both laws seek to protect the patient and their overall safety, along with the public’s best interest, from the danger that is present when a doctor’s medical judgment is clouded or tainted by the potential for personal and professional monetary gain.

The False Claims Act Case

The latest example of the government’s commitment in this particular area is the recent announcement that the Department of Justice has chosen to intervene in a False Claims Act case against a healthcare provider and its subsidiaries. In this case, Infirmary Health System Inc., IMC-Diagnostic and Medical Clinic P.C., Diagnostic Physicians Group P.C. and Infirmary Medical Clinics P.C. have been charged with violating the Anti-Kickback Statute and the Stark Law, fraudulently billing the government over $500 million as a result of the illegal kickback scheme.

This particular False Claims Act lawsuit charges that the IMC-Diagnostic and Medical Clinic, which are both located in Mobile, Alabama, improperly paid Diagnostic Physicians Group compensation that included a percentage of the money collected from Medicare for tests and procedures the doctors referred to the clinic.  These improper payments, and resulting submission of false claims to the Medicare program, violated the Stark Law and Anti-Kickback Statute.

The original complaint was filed back in July 2011 by a former cardiologist working for Diagnostic Physicians Group. The cardiologist, Dr. Christian Heesch, alleged that the physicians’ compensation package included a percentage of the money that was collected by IMC-Diagnostic and the Medical Clinics from Medicare for tests and procedures the physicians referred to the clinic.

Dr. Heesch also charged the doctors group and Infirmary Health System with ordering and performing medically unnecessary procedures, namely nuclear stress tests, over a nine year period that dates back to at least 2004. By performing nuclear tests when there was no medical justification, patients were needlessly exposed to low levels of radiation that are used to perform this particular type of stress test. Further, Dr. Heesch claimed that patient’s medical records were altered in order to justify the nuclear stress tests. After each of the unnecessary tests were performed, the Health System billed Medicare for reimbursement. By taking payment for these services, the healthcare providers involved in this scheme were defrauding the Medicare system of money.

What did doctors receive in exchange for referring patients to have these medically unnecessary nuclear stress tests? According to the government, each participating doctor was provided with an attractive below-market price for office space rentals, along with monetary payouts that were directly tied to the percentage of Medicare reimbursement the Health System received.

Unfortunately, when money and other forms of illegal-kickbacks are involved, it can be easy for some physicians to lose sight of their oath and allow their medical judgment to become compromised. By enforcing the Stark Law and the Anti-Kickback Statute, the government is able to deter this type of activity within the healthcare system. For example, the Stark Law prohibits a clinic or hospital from billing Medicare for services that are referred by physicians who have a financial relationship with the entity. The Anti-Kickback Statute, on the other hand, prohibits any provider from offering, paying, soliciting or receiving remuneration in an effort to induce referrals of services or items that are covered by federal health care programs, including Medicare.

“Financial arrangements that compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patient needs,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division.  “The Department of Justice is committed to preventing illegal financial relationships that corrupt the integrity of our public health programs.”