It is illegal to pay doctors for exclusive referrals.  If you get caught, it will cost you.

Such was the lesson for a Georgia-based anesthesia business and its two principal founders, who have agreed to pay $7.2 million to resolve kickback allegations made by a whistleblower, who will receive $1.3 million under the deal.

According to the complaint filed in 2016 and partially unsealed April 13, John R. Morgan, M.D., and Paul Weir, through their anesthesia business Care Plus Management, LLC, and 18 other entities they controlled, paid kickbacks to physicians from outpatient surgical centers in exchange for exclusive referrals for anesthesia services.  The allegations were made by Robert Douglas, who formerly served as senior vice president and chief operating officer for Care Plus, in a qui tam action brought on behalf of the government.  The United States and the State of Georgia intervened in the action in March 2022 to advise U.S. District Judge William M. Ray II that a partial settlement had been reached with the Care Plus parties.

The alleged scheme worked like this:  Care Plus recruited physicians who operated outpatient surgery centers by offering them an ownership stake in the anesthesia entities that Care Plus had set up in return for agreeing to use Care Plus anesthesia services exclusively.  In addition, Weir, Morgan, Care Plus, and its affiliated anesthesia entities paid some of the costs incurred by the surgery centers as further incentive to induce them into exclusive service arrangements.  The Government alleges that these practices violated the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b) and led to the submission of false claims in violation of the False Claims Act, 31 U.S.C. § 3729, et seq.

The original complaint included more than 50 medical entities across several states and numerous unnamed individuals, but the U.S. Government and State of Georgia intervened only as to the Care Plus parties.  Florida and Texas declined to intervene, and the claims with respect to those states will be dismissed without prejudice.  As is the norm with such civil settlements, there has been no admission or determination of liability.

The case is United States ex rel. Douglas, et al., v. Care Plus Management, LLC, et al., No. 1:16-cv-4439-WRM (N.D. Ga.).