Modern Healthcare | September 15, 2015 | By Lisa Schencker
A Florida taxing district that operates hospitals in Broward County will pay the government a record $69.5 million to settle allegations that it illegally paid nine doctors for referrals.
A whistle-blower accused North Broward Hospital District of violating the Stark law, governing physician financial relationships, by paying employed doctors at levels beyond the fair market value based, in part, on their referrals to Broward Health hospitals and clinics. That, in turn, led to the submission of false claims to the government, in violation of the False Claims Act, the whistle-blower alleged.
North Broward did not admit to any wrongdoing as part of the settlement.
“The resolution of this matter and today’s agreement will enable Broward Health to move beyond the allegations that arose in the context of this investigation,” David Di Pietro, chair of North Broward’s board of commissioners, said in a statement. “It is important to note that those allegations were focused solely on highly complicated contracts with physicians. This investigation was never about patient care.”
North Broward Hospital District is the governing and oversight body of Broward Health, which includes five medical centers and hospitals.
Broward Health reported operating revenue of $971 million in 2014, according to Modern Healthcare’s financial database.
The settlement is the largest ever reached without litigation under the Stark law, said Bryan Vroon, an Atlanta attorney for the whistle-blower in the case.
The whistle-blower, Fort Lauderdale orthopedic surgeon Dr. Michael Reilly, originally filed a lawsuit against Broward Health in 2010. Reilly said in court documents that Broward offered to employ him under terms that may have violated the Stark Law, which prohibits physician compensation that creates a financial conflict of interest.
Vroon said the settlement with Broward shows the Justice Department’s ability to settle important Stark cases without years of litigation by working with whistle-blowers.
“I think the government has made Stark investigations a priority, and they should be,” Vroon said. “When physicians are incentivized to make referrals it’s not optimal for patient care it can be detrimental to the Medicare program.”
In recent years, a number of Stark law cases have been brought to court under the False Claims Act, which carries triple damages if a court finds a provider liable. Because of those potentially huge damages, False Claims Act cases usually settle.
Earlier this year, a federal appeals court upheld a $237 million verdict against Tuomey Healthcare System in Sumter, S.C. in a Stark case that alleged violations of the False Claims Act. Last year, Florida’s Halifax Health agreed to settle a Stark/False Claims lawsuit for $85 million, though Halifax officials did not admit to fraud in that case.
Just last week, Georgia’s Columbus Regional Healthcare System agreed to pay the government $35 million to settle allegations that it violated the Stark law and the False Claims Act. Columbus did not admit to any liability as part of that settlement.
The Stark law has been widely criticized for its complexity. The CMS recently proposed regulatory changes that experts say seem aimed at easing the law’s technical burdens and reducing the numbers of self-disclosures coming to the CMS under the law.
Vroon, however, said Reilly hopes the case helps shine a light on similar situations elsewhere.
“Dr. Reilly really feels strongly this is a common problem … and hopefully the problems will get more attention,” Vroon said.
In False Claims Act cases, whistle-blowers are entitled to a portion of whatever money the government acquires. In this case, Reilly will receive $12 million.