Tri-City Medical Center will pay $3.28 million to settle alleged Stark Law violations that stemmed from financial arrangements with its former chief of staff and paperwork problems in more than 90 of its physician agreements.

The 400-bed hospital reported the potential violations in 2011. Under the Stark law, physicians cannot refer Medicare patients to hospitals and other physicians with which they have financial relationships, absent certain exceptions that include commercially reasonable arrangements that do not factor in the number of referrals a physician makes.  Tri-City reported five arrangements with its then-chief of staff that the Department of Justice stated “appeared not to be commercially reasonable or for fair market value.”  In addition, Tri-City entered into 92 financial arrangements with physicians and practice groups that failed to qualify for any Stark exceptions because the agreements allegedly were missing, had expired, or lacked signatures.

Reporter, R.J. Cooper, Sacramento, + 1 916 321 4809, rcooper@kslaw.com.