An Ohio-based hospital system, Akron General Health System (AGHS), has agreed to pay $21.25 million to resolve whistleblower claims that they violated the Anti-Kickback Statute of the False Claims Act. Beverly Brouse, the former Director of Internal Audit at AGHS, blew the whistle on AGHS under the qui tam provisions of the False Claims Act. She alleged that the hospital group was offering physicians over-market value payments for their services. The qui tam lawsuit stated that AGHS was overpaying physicians and physician groups to secure more patient referrals for the hospital system.
The whistleblower lawsuit alleged that between 2010 and 2016, AGHS ran a scheme that paid illegal kickbacks to doctors who would send an increased volume of patients to the hospital system, and then charged all of these extraneous costs to the Medicare program. Medicare is a federal program that helps elderly or otherwise disabled Americans pay for healthcare costs.
Under the False Claims Act, charging Medicare for doctor’s services that were more than the standard market price is a violation of the Anti-Kickback Statute and the Physician Self-Referral Law. The U.S. Department of Justice’s (DOJ) press release states that “AGHS paid compensation substantially in excess of fair market value” to local physician groups, in an apparent attempt to round up more referrals.
The DOJ also notes in their press release that AGHS was fully acquired by another company, the Cleveland Clinic Foundation, at the end of 2015. “The Clinic voluntarily disclosed to the government its concerns with these compensation arrangements, which were put in place by AGHS’s prior leadership, and received credit for its cooperation in the resolution reached by the parties,” the press release states.
“Physicians must make referrals and other medical decisions based on what is best for patients, not to serve profit-boosting business arrangements,” said Special Agent in Charge Lamont Pugh III of the Office of Inspector General for the United States Department of Health and Human Services. “Working closely with our law enforcement partners, we will continue to protect taxpayer-funded federal health care programs as well as patients.”
Medical kickback schemes often erode accountability in the medical system, especially when they take advantage of federal medical programs such as Medicare, Medicaid, and TRICARE. Americans covered under Medicare are often some of the country’s most vulnerable citizens, and defrauding them breaks down patient trust in the system, which in turn negatively affects public opinion of federal medical programs. The False Claims Act is uniquely positioned to help detect and end this kind of medical fraud.
The False Claims Act incentivizes whistleblowers to step forward and report fraud when they see it in the workplace. For her part in bringing the qui tam lawsuit against AGHS, Bouse will receive a reward of between 15 to 30% of the total $21.25 million recovered by the government. The qui tam provisions allow an individual whistleblower, or relator, to sue on behalf of the government, and be compensated for the risks and efforts that they assumed by doing so.
Federal medical fraud is a constant issue, as evidenced by the current high rate of settlements and disclosures. Just in the past month, there have been at least three other major medical fraud settlements reached, all mediated under the False Claims Act through whistleblower lawsuits.