On December 2, the U.S. Department of Justice announced that Flower Mound Hospital Partners LLC will pay $18.2 million to resolve allegations that it violated the False Claims Act. The whistleblower responsible for bringing the qui tam case against Flower Mound Hospital will receive $3 million for his involvement.
Flower Mound Hospital is a “partially physician-owned hospital in Flower Mound, Texas.” This settlement resolves allegations that it “knowingly submitted claims to the Medicare, Medicaid, and TRICARE programs that resulted from violations of the Physician Self-Referral Law and the Anti-Kickback Statute,” the press release states.
The Physician Self-Referral Law, or the Stark Law, outlaws hospitals “from billing for certain services referred by physicians with whom the hospital[s] has a financial relationship, unless that relationship satisfies one of the law’s statutory or regulatory exceptions.” Similarly, the Anti-Kickback Statute “prohibits offering or paying remuneration to induce the referral of items or services” covered by federal medical programs and “other federally funded programs.”
The U.S. alleged that Flower Mound Hospital violated both the Stark Law and the Anti-Kickback Statute “when it repurchased shares from physician-owners aged 63 or older and then resold those shares to younger physicians.” Allegedly, Flower Mound Hospital “impermissibly took into account the volume or value of certain physicians’ referrals when it (1) selected the physicians to whom the shares would be resold and (2) determined the number of shares each physician would receive.”
The whistleblower involved in bringing this qui tam case will receive approximately $3 million, as the civil settlement includes the resolution of the whistleblower’s claims. Leslie Jennings, M.D., is a physician-owner at Flower Mound Hospital and filed claims under the False Claims Act’s qui tam provisions. These provisions allow private individuals to file lawsuits on behalf of the federal government if they have knowledge about a citizen or company defrauding the government. Qui tam whistleblowers can then “receive a portion of any recovery,” the press release states.
Additionally, because the state of Texas “paid for a portion of the Medicaid claims at issue,” it will receive approximately $500,000 from the settlement.
As part of the settlement, Flower Mound Hospital “entered into a five-year Corporate Integrity Agreement (CIA)” with the Department of Health and Human Services’ Office of Inspector General. Per the CIA, Flower Mound Hospital will have to “maintain a compliance program and hire and Independent Review Organization to review arrangements entered into by or on behalf of the hospital,” among other responsibilities. The CIA “also increases individual accountability by requiring compliance-related certifications from key executives.”
“Improper financial arrangements between hospitals and physicians can distort physician decision-making and drive up health care costs for everybody,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division in the press release. “Patients deserve the independent and objective judgment of their health care professionals.” Indeed, medical kickbacks schemes can erode patient trust in the medical system and federal medical programs alike.
In his comment, U.S. Attorney Chad E. Meacham for the Northern District of Texas emphasized the importance of whistleblowers. “The Stark Law and the Anti-Kickback Statute are designed to ensure that physician financial considerations can never influence patient care…The system relies in part on whistleblowers who come forward to report financial improprieties at their workplaces.”
The press release concludes by highlighting the False Claims Act’s power and efficacy in rooting out healthcare fraud.