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Baltimore-Area Hospital Chain Pays $35M to Settle Kickback Claims

Posted  March 28, 2019

MedStar Health, a health system in Maryland and Washington, DC, and two of its hospitals have settled allegations that they violated the False Claims Act by violating the Anti-Kickback Statute. The settlement is not a determination of liability. It settles specific allegations that MedStar paid kickbacks to MidAtlantic Cardiovascular Associates, a cardiology group based in Maryland, in exchange for referrals.

Broadly speaking, the Anti-Kickback statute prohibits hospitals, physicians, pharmacies, nursing homes, durable medical equipment (DME) companies, pharmaceutical (drug) companies, medical device manufacturers, and other medical providers from paying or receiving kickbacks, remuneration, or anything of value in exchange for referrals of patients who will receive treatment paid for by government healthcare programs, such as Medicare and Medicaid. The law seeks to prevent physicians proscribing medically unnecessary medications or recommending unneeded tests. The Anti-Kickback Statute is also intended to ensure that a physician’s medical judgment is not compromised by financial incentives and is solely based on the best interests of the patient.

The kickbacks were allegedly paid under the guise of professional service agreements that exceeded fair market value, in exchange for the group referring its patients to MedStar hospitals for expensive cardiac procedures, including various surgeries. Some of the services promised in and paid for by the agreements were never provided. The alleged conduct occurred between 2006 and 2011.

This settlement also resolves allegations that a former MidAtlantic Cardiovascular Associates physician, who later worked for MedStar, performed unnecessary stent procedures between 2006 and 2012. Under Medicaid and Medicare rules, only procedures that are reasonable and necessary for the diagnosis or treatment of an illness or injury are eligible for reimbursement.

Each of the alleged frauds were revealed by whistleblowers in two different law suits. The kickback allegations were brought by three cardiac surgeons and the medical necessity allegations were brought by former patients. Whistleblowers stand to be awarded 15%-25% of government recoveries in cases such as this one. In this case, the whistleblowers who brought the kickback allegations will receive $5.18M and the whistleblowers who brought the medical necessity allegations will receive $420K.

Vigilant eyes of doctors, nurses, administrative professionals, and hospital employees will be essential in combating the increasing number of alleged frauds involving kickbacks, given that these relationships are often opaque and require perspective from insiders.


Tagged in: Anti-Kickback and Stark, FCA Federal, Healthcare Fraud, Lack of Medical Necessity, Whistleblower Case,