Nonprofit Hospital System and Physician Practice Reach $10 Million Settlement for False Claims Act Allegations

Arent Fox

DOJ News & Litigation Updates

Nonprofit Hospital System and Physician Practice Reach $10 Million Settlement for False Claims Act Allegations

Centra Health Inc., a nonprofit hospital system, and Blue Ridge Ear, Nose, Throat and Plastic Surgery, Inc., a physician practice group, agreed to pay $9,345,845 to resolve alleged violations of the False Claims Act and the Virginia Fraud Against Taxpayers Act. Centra proactively self-disclosed to the government that it had several agreements with physicians, including Blue Ridge, that took into account the value of referrals, were not memorialized in a written and executed contract, and that did not satisfy any statutory exemption. These financial relationships allegedly violated the Stark Law, the Anti-Kickback Statute, and other federal laws that prescribe limitations on the relationships that hospitals may have with referring physicians. When it announced the settlement, the government emphasized its willingness to work with community partners who review their own practices and make appropriate self-disclosures.

Separately, a former Blue Ridge physician brought a qui tam suit alleging that Blue Ridge had an unlawful arrangement with Centra, whereby Centra agreed to reimburse Blue Ridge for actual additional incremental costs attributed to a physician, but Blue Ridge knowingly received reimbursement in excess of what the Stark Law and Anti-Kickback Statute allow. The relator will receive a share of the settlement, which resolved allegations only and did not determine liability.

Read the press release here.

Taxi Operator Sentenced for Medicaid-Funded Transportation Fraud

A taxi operator from Albany, New York, was sentenced to 18 months in prison, plus three years of supervised release, and ordered to pay $50,000 in restitution, following his guilty plea to committing fraud and paying bribes in connection with Medicaid-funded transportation. From 2015 through 2018, the defendant worked for Ti Taxi Inc., among other transportation companies funded by Medicaid.

The defendant admitted that he defrauded the Medicaid program and the New York State Department of Health by billing Medicaid for trips for beneficiaries who drove themselves to their medical appointments and did not rely on his services, and falsifying the identities of the purported drivers for these trips. He also allegedly billed the government for roundtrips when the beneficiaries took only one-way trips. The defendant also admitted to falsifying the pick-up and drop-off locations to increase the total distance traveled and thus receive higher reimbursement from Medicaid. He further admitted to bribing Medicaid beneficiaries to schedule medical transportation appointments by providing cash, phone cards, cigarettes, and other convenience store goods.

The defendant is one of several operators of medical transportation companies that were the subject of the Medicaid fraud investigation and have also pled guilty.

Read the press release here.

Maryland Cardiologist to Pay $750,000 for Alleged Physician Kickbacks

A Maryland cardiologist, and Washington Cardiovascular Institute, Advanced Vascular Resources, and Washington Vascular Institute, three medical practices with which he is associated, agreed to pay $750,000 to resolve alleged violations of the False Claims Act based on the submission of claims to federal healthcare programs in connection with ankle-brachial index testing, which is used to detect peripheral arterial disease.

The government alleged that, between January 2013 and December 2016, the Defendants induced patient referrals for ankle-brachial index testing pursuant to agreements with referring physicians, without requiring the physicians to pay the fair market value for the tests, thus paying kickbacks to referring physicians in violation of the Anti-Kickback Statute. The lawsuit originated from a whistleblower complaint filed by a former sales and operations employee of the medical practices. The whistleblower will receive $121,500 from the government’s recovery.

Read the press release here.

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. Attorney Advertising.

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