Hospital system pays $84.5 million to settle AKS and Stark Law violations



In 2010 and 2011, four former employees of William Beaumont Hospitals (WBH) in Detroit, Michigan filed separate lawsuits under the federal civil False Claims Act and Michigan Medicaid False Claims Act, alleging violations of the federal health care program anti-kickback statute (AKS), the federal physician self-referral law (Stark Law), and certain other statutory and regulatory requirements.  On October 15, 2015, the four cases were consolidated; on July 30, 2018, the United States and the State of Michigan formally intervened in the consolidated actions; and on August 2, 2018 — following almost eight years of investigation — the U.S. Department of Justice (DOJ) announced that the lawsuits had been settled for $84.5 million ($82.74 million to the federal government and $1.76 million to the state of Michigan).  Under the terms of the settlement, WBH also will be subject to a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG).  Collectively, the complaints allege that WBH:

  • paid physician-employees in excess of fair market value (FMV);
  • paid medical directors (1) for services that were not necessary, (2) for services that were not performed, (3) in excess of FMV, and/or (4) for medical directorships that had no job descriptions, performance standards, or evaluations;
  • paid physicians twice under separate arrangements for substantially the same work;
  • subsidized the private practices of physicians by providing midlevel practitioners, software, and office signage free of charge;
  • rented office space to physicians for less than FMV;
  • permitted "full-time" physician-employees to maintain private practices (and thus supplement their full-time income with collections from private practice);
  • used a joint venture with an oncology group as a vehicle to incentivize the group to refer patients to WBH; and
  • purchased equipment that the hospital did not need from referring cardiologists.

The settlement agreement also contends that WBH furnished and billed certain CT radiology services as hospital services even though the imaging center did not comply with Medicare provider-based rule requirements.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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