Pacific Alliance Medical Center, a hospital in Los Angeles’ Chinatown neighborhood, settled allegations that its financial relationships violated the Stark Law and Anti-Kickback Statute. Of the $42 million settlement, $32 million is allocated to the United States, while the remaining $10 million is allocated to the State of California.
According to the allegations, the improper financial relationships took two forms. One type of arrangement had the hospital paying above-market rates to rent office space in physicians’ office. The second arrangement involved marketing, paid for by the hospital, that provided undue benefit to physicians’ practices. According to the suit, these relationships violated the Anti-Kickback Statute and the Stark Law, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.
The suit was filed by a whistleblower, Paul Chan, who was employed as a manager at Pacific Alliance Medical Center. Mr. Chan will receive over $9 million as his share of the federal recovery, and possibly more from the State of California.
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