Okay, there’s not really a Most-Illegal-Physician-Compensation Prize.  But if there were, Florida’s North Broward Hospital District would have won in a walk.  That’s why the district has agreed to pay the government $69.5 million to settle charges that it violated the Stark Law, the Anti-Kickback Statute and the False Claims Act.

Here’s how the compensation system worked.  You may want to use it as a guideline for how not to compensate physicians.  First, each of the nine physicians received a salary in the seven figures, even though some of their practices were operating at a loss and even though the district itself racked up losses of $150 million from 2004 to 2011.

Second, the district kept a “Contribution Margin Report” for each of the nine physicians.  That title is helpful to federal investigators when they look for evidence tying compensation to the volume or value of referrals.

Third, the Contribution Margin Report tracked and rewarded physicians for referring patients to in-hospital services like radiology and physical therapy.

Fourth, the Report didn’t stop at rewarding for referrals; it also punished the physicians for taking on low-paying charity cases.

How did all this come to light?  Michael Reilly, M.D., showed his lawyer a contract proposed by the district.  The lawyer told him to tear it up.  He did.  He also filed a qui tam suit.  His share of the settlement is $12 million.

The case is U.S. ex rel. Reilly v. North Broward Health Dist., No. 0:10-cv-60590 (S.D. Fla.)