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Hospital Settles Alleged Fraud Case with Government

A Florida Hospital recently agreed to a record fine to settle a whistleblower claim with the U.S. Justice Department.

The federal Stark Law defines referral relationships between a physician and other providers. This complicated legislation prohibits caregiver referrals to an entity with whom they have a financial relationship, if services for the patient are to be billed to Medicare or Medicaid.

In this case, Halifax Hospital settled with the Justice Department over allegations that:

  • Six oncologists received incentive payments for prescription drugs and services billed to Medicare through Halifax Hospital.
  • Halifax Hospital compensated three surgeons at a higher than fair market value rate.

Of the case, Assistant Attorney General Stuart F. Delery noted “[f]inancial arrangements that compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patient needs.”

The settlement agreement includes payment of $85 million plus attorney fees. The sum is substantially less than the $500 million sought by the Justice Department. The agreement also provides for Halifax Hospital to develop a plan to significantly reform its internal compliance procedures. The plan is to be monitored by an independent auditor for five years.

The matter was brought to the attention of the Justice Department by a former compliance offer with Halifax Hospital. With the agreement, the whistleblower stands to receive more than $20 million of the negotiated settlement.

Despite resolution of these allegations, the matter is not concluded. Further issues in the case are set for trial in July of this year.

Compliance with federal law and state regulations are essential for healthcare providers and their facilities. When you have questions about referral, billing or other practices, speak with attorneys providing experienced legal advice to physicians and medical practices in Jacksonville.

Jacksonville, Florida healthcare attorney Andrea Jevic also contributed to this blog post.

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