Acute Care Hospital Agrees to Pay $50 Million to Settle Alleged Stark Law and Anti-Kickback Statute Violations
On September 9, 2020, the Department of Justice (“DOJ”) announced that Wheeling Hospital Inc. (“Wheeling Hospital”), an acute care hospital in West Virginia, agreed to pay $50 million to resolve alleged False Claims Act violations. The DOJ alleged that that, from 2007 to 2020, Wheeling Hospital violated the Stark Law and Anti-Kickback Statute by knowingly and willfully paying referring physicians based on the volume or value of the physicians’ referrals or at amounts that exceeded fair market value.
The Stark Law prohibits a hospital from billing Medicare for services referred by physicians with whom the hospital has a financial relationship unless the relationship complies with a statutory or regulatory exception. The Anti-Kickback Statute prohibits hospitals from offering or paying compensation to induce referrals of services funded by Medicare, Medicaid, or other federal healthcare programs.
The settlement resolves allegations initially brought by a former Executive Vice President of Wheeling Hospital under the qui tam provisions of the False Claims Act. The whistleblower will receive $10 million of the settlement proceeds.
See here for the DOJ press release.
California Medical Imaging Company and Medical Practice Agree to Pay $5 Million to Settle False Claims Act Allegations
On September 9, 2020, the DOJ announced that a medical practice and a medical imaging company, which together operate 11 radiology facilities in Southern California, agreed to pay $5 million to resolve False Claims Act allegations. The DOJ alleged that these companies submitted claims to Medicare and TRICARE for CT scans and MRIs provided at unaccredited facilities and when no supervising physician was present in the office suite, in violation of applicable program rules.
The settlement resolves allegations originally brought by a former employee under the qui tam provisions of the False Claims Act. The whistleblower will receive $925,000 of the settlement proceeds. The defendants also entered into a three-year Integrity Agreement with the Department of Health and Human Services Office of Inspector General, which requires the companies to implement a risk assessment and internal review process to address compliance risks, in addition to training, auditing, and monitoring requirements.
See here for the DOJ press release.
California Lawyer Pleads Guilty to Fraudulent Credit Card Payment Processing Scheme and to Conduit Campaign Contribution Conspiracy
On September 9, 2020, the DOJ announced that a Glendale, California lawyer pleaded guilty to one count of conspiracy to commit wire fraud affecting a financial institution and bank fraud and one count of alteration and falsification of records in connection with his role in a conspiracy to defraud a bank into processing over $5 million in credit and debit card payments for a student loan debit relief merchant.
The lawyer, who served as the General Counsel at the payment processing company at issue (the “Company”), admitted that he conspired to fraudulently obtain payment processing services on behalf of a merchant providing student loan debt relief services. The DOJ alleged that the Company had obtained payment card processing for the merchant from Fifth Third Bank, but the bank terminated the merchant in May 2017. Thereafter, Company executives advised the merchant to re-apply for processing by Fifth Third Bank in the names of “sham merchants.” According to the DOJ, these “sham merchants” purported to sell housewares and other retail items to reduce the appearance of business risk, but, in reality, were fronts for transactions that involved student loan debt-relief. The DOJ alleged that, upon learning of the scheme, the lawyer joined the conspiracy and earned commission payments of approximately $20,292.
Also on September 9, 2020, the DOJ announced that the same lawyer pleaded guilty to one count of conspiracy to make conduit contributions, make excessive contributions, cause false statements, and cause false entries in records. In connection with this plea, the lawyer admitted that he conspired with others to make unlawful contributions to political committees, thereby circumventing contribution limits and causing political committees to submit false reports to the Federal Election Commission. More specifically, the lawyer admitted that he accepted $50,000 from a co-conspirator in October 2016 to contribute -- in the lawyer’s name -- to a political committee supporting a presidential candidate. The lawyer also admitted that he accepted an additional sum of approximately $50,000 in January 2018 from the co-conspirator to contribute to another political committee in the lawyer’s name. The contributions in the lawyer’s name enabled his co-conspirator to exceed political campaign contribution limits under federal elections laws.
A sentencing hearing has not yet been scheduled with respect to either guilty plea.
See here and here for the DOJ press releases.