The False Claims Act – and its companion statute, the Stark Law – expressly forbid hospital corporations from offering any sort of kickback or incentive in exchange for patient referrals or recommendations of certain products. These rules stem from the notion that patients should receive medical advice untainted by a doctor’s anticipation of a reward, and such advice should be focused solely on that patient’s particular medical needs.
In a recent announcement by the Department of Justice, the North Broward Hospital District has agreed to pay $69.5 million to the state of Florida and the federal government amid whistleblower allegations that it engaged in illegal kickback activities with doctors and specialists.[1. DOJ Press Release, “Florida Hospital District Agrees to Pay United States $69.5 Million to Settle False Claims Act Allegations.” September 15, 2015.http://www.justice.gov/usao-sdfl/pr/florida-hospital-district-agrees-pay-united-states-695-million-settle-false-claims-act] The case was brought to light in 2011 by a whistleblower who worked as a former physician for the group, and his qui tam award tops $12 million.
Details of the allegations against Broward Health
Broward Health operates dozens of medical centers in South Florida in what’s known as a ‘special taxing district.’ The hospital system is the product of special referendums geared toward creating a community-supported consolidated healthcare system. As a result, the system is one of the largest in the United States and the largest healthcare employer in the state of Florida, with nearly 8,000 employees.
According to the allegations, the organization was involved in agreements with several physicians providing kickbacks based on the number of patient referrals to the Broward Health system. More specifically, the allegations reveal that Broward Health offered nine physicians additional compensation and salaries that were well above fair market value for their services.
As a result of the kickbacks, several components of the Broward Health system were reportedly operating at a net revenue loss. For instance, the hematology/oncology department reportedly took a loss of $1.35 million in fiscal year 2011, while the Orthopedics group reported a loss of $2.48 million. According to the plaintiff’s complaint, an overall loss of $20 million program-wide could be attributed to the overcompensation of doctors in exchange for referrals.
The plaintiff also submitted evidence of “contribution margin reports,” which were designed to ensure physician overcompensation made sense in light of the purported additional referrals funneling into the Broward Health system.
Comments on the settlement
As is typical, the defendant has not admitted any wrongdoing in the matter and maintains that the settlement was reached solely to avoid the protracted costs of litigation.[2. Lincoff, Nina, “Broward Health to pay $70M to settle False Claims Act allegations.” September 15, 2015. http://www.bizjournals.com/southflorida/news/2015/09/15/broward-health-to-pay-70m-to-settle-false-claims.html]
U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida said in a statement, “Our citizens deserve medical treatment uncorrupted by excessive salaries paid to physicians as a reward for the referral of business rather than the provision of the highest quality healthcare….This office will be steadfast in continuing to devote all necessary resources to ensure that anyone rendering medical care does so for the sole benefit of the patient and in compliance with the law.”
The Department of Justice similarly commented, stating, “[Our office has] long-standing concerns about improper financial relationships between health care providers and their referral sources, because those relationships can alter a physician’s judgment about the patient’s true healthcare needs and drive up healthcare costs for everybody….In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make healthcare more affordable.”
Contact Berger Montague today
If you are considering a whistleblower lawsuit or would like to discuss possible fraud occurring at your place of employment, please contact Berger Montague today.