Consumer Fraud

U.S. recovers $3.95 million from Montana hospitals for False Claims Act and Stark Law violations

osha whistle U.S. recovers $3.95 million from Montana hospitals for False Claims Act and Stark Law violationsTwo Montana hospitals have agreed to pay nearly $4 million plus interest to the federal government to resolve allegations that they violated the False Claims Act (FCA) and the Stark Law by providing incentive pay to doctors who referred patients to the hospitals.

The False Claims Act is designed to facilitate the recovery of money from persons and companies (usually government contractors) who defraud the federal government. The FCA contains a “qui tam” or “whistleblower” provision that allows individuals not affiliated with the federal government to sue on its behalf and receive a percent of the recovery.

The Stark Law is a federal law that prohibits certain financial relationships between hospitals and physicians that treat Medicare and Medicaid patients. For instance, the law prohibits hospitals from compensating physicians in a manner that takes into account the volume of the physician’s patient referrals or the level of revenue brought by those referrals.

According to the Justice Department, St. Vincent Healthcare in Billings and Holy Rosary Healthcare in Miles City allegedly compensated several physicians with incentive pay that accounted for the volume of their patient referrals or the value of the referrals. The hospitals disclosed their actions to the government after realizing they violated the False Claims Act and the Stark Law.

“The resolution of this matter underscores our commitment to ensure that services reimbursable by federal health care programs are based on the best interests of patients rather than the personal financial interests of referring physicians,” said Stuart F. Delery, Acting Assistant Attorney General for the U.S. Justice Department’s Civil Division.

Michael W. Cotter, U.S. Attorney for the District of Montana, said the case “demonstrates how the Department of Justice will work with those health care providers who disclose their misconduct.”

“There is an expectation that corporations providing services to Medicare and Medicaid beneficiaries adhere to the provision of the Stark Law,” said Gerry Roy of the U.S. Department of Health and Human Services’ Office of Inspector General, who applauded the hospitals for disclosing their wrongdoing.

“Working closely with our partners at the Department of Justice, we will vigilantly protect federal health care programs against violations of the Stark Law,” Mr. Roy said.

Self-disclosed wrongdoing is very rare in the corporate world, and most cases of health care fraud can go undetected for years. In times when Medicare and Medicaid budgets face enormous challenges, combating fraud and other forms of wrongdoing has become a top priority of U.S. Justice Department.

Whistleblower provisions of the False Claims Act enable individuals to become the “eyes and ears” of fraud detection and take legal action to recover funds taken from vital taxpayer-funded programs.


U.S. Justice Department