Texas Medical Center Settles Healthcare Fraud Allegations for $21.75 Million

Known as the “Heart Hospital,” the county-owned Citizens Medical Center has agreed to pay a staggering $21.75 million amid allegations it engaged in unlawful kickback schemes with several of its cardiology and emergency medicine practitioners.

Under both the False Claims Act and the Stark Law, it is considered unlawful to induce government healthcare providers to engage in any sort of healthcare-related procedure or referral when any provider receives a financial incentive for that referral or has a financial stake in the provider to which the referral is made. The doctor-patient relationship is meant to involve careful, mindful medical counsel, and patients should be able to trust that their doctor’s opinion was developed based solely on that patient’s needs and unique circumstance, as opposed to the possibility for financial gain.

In this case, three whistleblowers alerted the government to the ongoing scheme occurring at Citizens Medical. The three plaintiffs are themselves cardiologists with the Citizens Medical Center and they are set to receive $5.7 million to split as a reward for exposing the costly and wasteful fraud.

Details of the allegations against Citizens Medical

According to the factual allegations set forth by the plaintiffs, the hospital administrator working for Citizens Medical awarded bonuses to emergency room physicians in exchange for referrals made of Medicare and Medicaid patients to the facility’s chest pain laboratory. It was later discovered that 100 percent of patients referred to the chest pain center were Medicaid and Medicare enrollees and the hospital administrator had “personally designed” this system in order to maximize profits.

Secondly, the same hospital administrator offered certain cardiologists an “above market” salary and below market rental space in exchange for the doctors’ promises to exclusively refer Medicare and Medicaid patients to the hospital system for cardiology services. According to the allegations, these doctors were paid “many times” their private practice salary in exchange for the exclusive referral agreement.

In addition to unlawful cardiology referrals, the hospital was also alleged to have offered gastroenterologists similar incentives to exclusively refer Medicaid and Medicare patients to its colonoscopy screening program. More specifically, the program utilized a single gastroenterologist on “screening days” to perform the entirety of the scheduled colonoscopy procedures. The doctor was offered a $1,000 “directorship” payment in addition to his or her regular earnings on that day. However, the $1,000 could not be tied to any additional work or responsibilities and is alleged to have been a veiled kickback for referring Medicare and Medicaid patients to the screening program.

The DOJ said in a statement:

“The Department of Justice has longstanding concerns about improper financial relationships between healthcare 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.”

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