July 25, 2014

DOJ Catch Of The Week — Infirmary Health System Inc.

InfirmaryBy the C|C Whistleblower Lawyer Team

This week’s Department of Justice “catch of the week” goes to Infirmary Health System Inc. On Monday, the Alabama-based hospital system, along with two affiliated clinics and Diagnostic Physicians Group (DPG), agreed to pay $24.5 million to resolve government allegations they violated the False Claims Act. Specifically, the government charged the group with violating the Physician Self-Referral Law (commonly known as the Stark Law) and the Anti-Kickback Statute by paying or receiving financial inducements for medical referrals covered by Medicare. See DOJ press release.

According to the government, the two Infirmary Health clinics had agreements with DPG to pay it a percentage of Medicare payments for tests and procedures DPG referred to the clinics. This arrangement stemmed from DPG’s prior sale of the clinics to the Infirmary Health group and their agreement to maintain financial ties. The government contended that one of DPG’s attorneys had warned the companies that the financial arrangement likely violated the law but they continued the arrangement anyway.

In announcing the settlement, DOJ Civil Chief Stuart Delery made clear the government’s commitment to strictly enforce the Anti-Kickback Statute and Stark Law to ensure a physician’s medical judgment is in no way clouded by improper financial incentives:  “Financial arrangements that compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patients’ needs. . . . The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs.”

The lawsuit was originally filed by former DPG physician Dr. Christian Heesch under the whistleblower provisions of the False Claims Act.  Dr. Heesch will receive $4.4 million as his share of the settlement.

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