Infirmary Health, Inc. Agrees to Pay $24.5 Million to Settle False Claims Act Allegations

In a press release issued by the U.S. Department of Justice late last month, Mobile, Alabama-based Infirmary Health, Inc. has agreed to pay over $24 million to settle claims it engaged in unlawful kickback schemes and fraudulent conduct in violation of the False Claims Act. The allegations specifically address unlawful interactions with physicians and medical professionals treating Medicare patients. Under the False Claims Act, it is considered a violation to submit any claim for reimbursement on behalf of a Medicare patient when that patient sought treatment pursuant to a doctor’s recommendation in exchange for kickbacks. Liability under the False Claims Act can reach up to $11,000 per violation, as well as an assessment of triple damages.

Details of Case Against Infirmary Health, Inc.

The False Claims Act case against Infirmary also involves two affiliated clinics: IMC-Diagnostic and Medical Clinic, and IMC-Northside Clinic, as well as an entity known as Diagnostic Physicians Group (DPG). The case was originally filed by a whistleblower previously employed by DPG as a physician. Shortly after filing his claim, the United States opted to partially intervene on some of the whistleblower’s claims.

According to the allegations, the two affiliated clinics mentioned above had entered into an agreement with DPG to pay DPG a certain percentage of Medicare reimbursements issued for tests and procedures provided by the defendants whenever the patient was referred by a DPG physician.

The allegations also expose a possible inappropriate financial relationship following the sale and reorganization of some of the clinics under the Infirmary Health umbrella. Specifically, in 1998 IMC purchased IMC-Diagnostic and Medical Clinic from DPG, and agreed to pay DPG a portion of any revenues collected by the clinics thereafter. The agreement specifically provided that DPG would receive a portion of proceeds derived from Medicare-reimbursed laboratory testing and diagnostic imaging. Shortly thereafter, IMC purchased the Northside clinic and recruited the Northside physicians to DPG under the same general agreement as offered to physicians at the IMC-Diagnostic and Medical Clinic earlier. Under the Anti-Kickback Statute and the Stark Law, this sort of self-serving financial arrangement is considered a violation of a proper doctor-patient relationship and is expressly forbidden.

These laws are designed to ensure that the doctor-patient relationship, including all medical advice and referrals, are not tainted with the doctor’s desire to earn additional money off the transaction. In other words, patients should be able to trust that their doctor’s recommendations are truly in their best interests, and are not deriving from a pre-conceived kickback arrangement.

Government’s Response

Infirmary Health was required to enter into a strict compliance agreement in addition to its remittance of an eight-figure settlement. In response to the resolution of the matter, U.S. Attorney Kenyen Brown remarked, “Today’s settlement represents a single but significant step towards achieving integrity in the administration of public health programs in this region….Physicians, physician groups, and other medical entities operating illegally within public health programs will be held accountable. I also commend whistleblowers like Dr. Christian Heesch, who helped bring this particular case to light.”

The whistleblower in this case is set to receive $4.41 million for his willingness to come forward.

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By | 2018-03-27T09:54:25+00:00 August 18th, 2014|Healthcare Fraud|