On January 4, the U.S. attorney for the Middle District of Tennessee announced that Methodist Le Bonheur Healthcare and Methodist Healthcare-Memphis Hospitals (Methodist) agreed to pay $7.25 million to resolve allegations of False Claims Act (FCA) violations. Two qui tam whistleblowers alleged that Methodist defrauded Medicare by illegally paying kickbacks to physicians.
According to the government, “from December 2011 until February 2019, Methodist had a multi-agreement affiliation with the West Clinic and the University of Tennessee Health Science Center. The affiliation agreements with the West Clinic included an Asset Purchase Agreement, Management Services Agreement, Leased Employee and Administrative Services Agreement, and Professional Services Agreement.”
The government alleges that “Methodist used these agreements as a vehicle to pay kickbacks to the West Clinic in part to induce the West Clinic to refer Medicare beneficiaries to Methodist.”
“Federal law prohibits money from influencing where a doctor refers a patient for treatment to keep doctors focused solely on what is best for the patient,” said United States Attorney Henry C. Leventis. “We contend that Methodist’s affiliation with the West Clinic ran afoul of that law. When hospitals pay kickbacks to physician practices, regardless of what form those kickbacks take, they can expect to be the focus of our enforcement efforts.”
The settlement stems from a qui tam whistleblower suit filed by Jeffrey Liebman, a former president of Methodist University Hospital, and David Stern, a former Dean of the University of Tennessee Health Science Center.
The False Claims Act’s qui tam provisions enable private citizens and private parties to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. Qui tam whistleblowers are eligible to receive between 15 and 30% of the government’s recovery.
On July 25, a bipartisan group of senators introduced the False Claims Amendments Act of 2023, which address a few technical loopholes undermining the success of the FCA. The bill is widely supported by whistleblower advocates.
“The False Claims Act is America’s number one fraud-fighting law,” said whistleblower attorney Stephen M. Kohn. “These amendments are urgently needed to ensure that whistleblowers can continue to play their key role in protecting taxpayers from corporate criminals.”
Further Reading:
Bipartisan Legislation Unveiled to Strengthen False Claims Act