September 12, 2017

Family Medicine Centers Settles Whistleblower False Claims Act Charges

By the C|C Whistleblower Lawyer Team

A South Carolina family medical practice chain, along with its owner and laboratory director, agreed to pay roughly $2 Million to settle charges of violating the False Claims Act and Stark Law which prohibits physician self-referrals. Specifically, Family Medicine Centers of South Carolina (FMC) agreed to pay $1.56 million, and FMC’s principal owner Dr. Stephen F. Serbin and former Laboratory Director Victoria Serbin agreed to pay $443,000. FMC is a physician-owned chain of family medicine clinics located in and around Columbia, South Carolina. See DOJ Press Release.

The Stark Law is designed to ensure a physician’s medical judgment is not compromised by improper financial incentives. It forbids a clinic from billing Medicare for certain services ordered by physicians who have a financial relationship with the entity. According to the government, the Stark Law was violated by FMC’s incentive compensation plan which paid FMC’s physicians a percentage of the value of laboratory and other diagnostic tests that they personally ordered through FMC. Dr. Serbin allegedly created the program and encouraged or directed FMC’s physicians to order tests and other services through FMC to increase FMC’s profits and ensure their take-home pay remained in the upper level nationwide for family practice doctors. The government further alleged that FMC submitted claims for medically unnecessary laboratory services.

In announcing the settlement, the government stressed that financial incentives should play no role in medical decision making. Acting DOJ Civil Chief Chad Readler highlighted the agency’s commitment “to preventing illegal financial relationships that undermine the integrity of our public health programs and drive up the cost of healthcare for taxpayers.” US Attorney Beth Drake for the District of South Carolina echoed this sentiment, stating “[h]ealthcare decisions should be made by physicians based on medical science and not with regard to maximizing the doctor’s own income. Our goal in bringing this case was not only to recover money for improper healthcare claims, but also to deter similar conduct and promote health care affordability.”

The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act filed by former FMC physician Dr. Catherine A. Schaefer. She will receive a whistleblower award of $340,510 from the proceeds of the government’s recovery.

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