Tri-City Medical Center, an Oceanside, Calif., hospital, has agreed to pay the U.S. more than $3.2 to resolve allegations that it violated the Stark Law and False Claims Act by maintaining improper financial arrangements with physicians in the community that put business profits ahead of patient needs, federal prosecutors said Friday.
Tri-City Medical Center had nearly 100 financial arrangements with physicians and physician groups that did not comply with the Stark Law and violated Medicare program rules, the U.S. Justice Department said. These arrangements occurred from 2008 to 2011. Several of the arrangements had written agreements that had expired, missing signatures, were not documented, or agreements were missing.
The Stark Law largely forbids a hospital from billing Medicare for certain services referred by physicians with whom the hospital has a financial relationship. Certain exceptions apply, such as if the financial arrangements do not exceed fair market value for patient treatment, are not based on the volume or value of referrals, and are commercially reasonable.
The Justice Department claims it couldn’t verify whether the financial arrangements Tri-City Medical Center kept with physicians satisfied an exemption because of the missing or expired agreements. According to the U.S., Tri-City disclosed this misconduct and identified the problems, which occurred under a former hospital chief, to authorities.
“Patient referrals should be based on a physician’s medical judgment and a patient’s medical needs, not on a physician’s financial interests or a hospital’s business goals,” said U. S. Attorney Laura E. Duffy of the Southern District of California, who helped prosecute the case.
Reimbursements Tri-City Medical Center sought from Medicare for services provided under the improper arrangements constituted a submission of false claims because they weren’t based on patient need.
The False Claims Act is one of the government’s strongest weapons in combatting fraud committed against taxpayer-funded agencies and programs.
The U.S government can sue health care providers for Medicare fraud and other wrongdoing under the False Claims Act, one of the best fraud-busting weapons in its anti-corruption arsenal. Whereas this complaint was initiated by federal authorities, most False Claims Act lawsuits are filed by private individuals under the Act’s “whistleblower” provisions, which authorize them to sue on behalf of the government and share a percentage of any recovery in excess of $1 million.
Source: U.S. Department of Justice