Recent Litigation and Dispute Matters Involving Impermissible Financial Arrangements

Published by Becker’s Hospital Review

Published by John Meindl and Ingrid Aguirre

Summarized below are some recent litigation and dispute matters involving impermissible financial relationships with physicians; including alleged kick-backs, compensation, leasing, and various other arrangements.

The healthcare compliance environment continues to be challenged with complex regulations, increasing qui tam activity, and regulators increasing their efforts to reduce fraud and abuse.

1. United States ex rel. Deshpande, et al. v. The Jamaica Hospital Medical Center, et al. – September, 2017

MediSys Health Network, Inc. allegedly violated the False Claims Act by engaging in alleged improper financial relationship with referring physicians, according to the Justice Department. In this case, the improper financial relationshps occurred in the form of compensation and office lease arrangements that were allegedly not compliant with Stark Law. Stark Law restricts the financial relationships that hospitals may have with referring physicians. MediSys Health settled for $4 million with the DOJ for this whistleblower suit. The lawsuit was filed under the qui tam, or whistleblower provision of the False Claims Act. The claims settled by this agreement are allegations only, and there has been no determination of liability.

2. $1.3 Billion Takedown – July, 2017

The Department of Justice found over 412 individuals, across 41 federal districts, responsible for approximately $1.3 billion in fraud losses due to false billings. This represents the largest health care fraud enforcement action in Department of Justice history. These false billings charged Medicare, Medicaid and TRICARE for unnecessary drug prescriptions and for medications that were never purchased or distributed to the beneficiaries. According to the Department of Justice, patient recruiters, beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information in order for the providers to then submit fraudulent bills to Medicare for unnecessary medical services or services that were never performed. A complaint, information, or indictment is merely an allegation, as there has been no determination of liability.

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