South Dakota Surgical Hospital Agrees to Pay $12.7 Million to Settle Kickback and Stark Law Violations
The DOJ announced Dunes Surgical Hospital in South Dakota and United Surgical Partners International (USPI) and its subsidiary, USP Siouxland, have agreed to pay $12.7 million to settle a False Claims Act case alleging the hospital engaged in illegal financial relationships with two physician groups. These arrangements spanned from 2014 to 2019 and involved payments that led to improper patient referrals to Dunes in violation of the Anti-Kickback Statute (AKS) & the Stark Law.
Dunes allegedly made substantial financial contributions to a non-profit connected with a physician group that referred patients to the hospital. These funds were used to pay athletic trainers who generated referrals to both the physician group and the hospital. Additionally, Dunes allegedly provided free or heavily discounted clinic space, staff, and supplies to another physician group.
These types of financial arrangements are in direct violation of the AKS, which prohibits healthcare providers from offering financial incentives for referrals, and the Stark Law, which restricts hospitals from billing for services referred by doctors with whom they have financial relationships that do not fall within one of the exceptions.
“The AKS and Stark Law are designed to ensure that decisions about patient care are based on physicians’ independent medical judgment and not their personal financial interest,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. U.S. Attorney Timothy T. Duax for the Northern District of Iowa added,
“Illegal kickbacks and self-referrals make healthcare more expensive and create the potential for medical decisions that are not based on what is best for patients.”
Dunes and USPI received credit for working cooperatively with the government’s investigation, including voluntarily disclosing violations. They provided a detailed account of the improper arrangements and took corrective actions and received credit for doing so. As Boynton stated, “As this settlement reflects, we will hold accountable those who violate these important safeguards, but we will also give to those who disclose their wrongdoing, take appropriate remedial actions and meaningfully cooperate with the government’s investigation.”
In addition to the $12.7 million paid to the federal government for Medicare, TRICARE, and Medicaid violations, South Dakota, Iowa, and Nebraska will receive $1.37 million for their share of the Medicaid settlement.
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