Justice News

Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE
Tuesday, December 1, 2009
Los Angeles’ Kerlan Jobe Orthopaedic Clinic Pays $3 Million to Settle Kickback Allegations

WASHINGTON - The Kerlan Jobe Orthopaedic Clinic, a sports medicine clinic in Los Angeles, has agreed to pay the United States $3 million to settle allegations that it received illegal kickbacks from HealthSouth Corporation, the Justice Department announced today.

The settlement resolves allegations that HealthSouth paid kickbacks to Kerlan Jobe in the form of stock option grants, donations to the Kerlan Jobe Foundation, loan forgiveness on an equipment lease, and a disproportionately high ownership interest in a jointly owned ambulatory surgery center. In exchange for the illegal kickbacks, Kerlan Jobe allegedly referred patients to HealthSouth facilities. As a condition of continued participation in government healthcare programs, Kerlan Jobe was required to enter into a Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services to address Kerlan Jobe’s financial relationships with referral recipients.

"People are entitled to trust the advice they receive from their health care providers," said Tony West, Assistant Attorney General in charge of the Department of Justice’s Civil Division. "When kickbacks are involved, the integrity of that advice is undermined."

This settlement follows a December 2007 settlement between the United States and HealthSouth in which HealthSouth paid the United States approximately $14.7 million to resolve HealthSouth’s liability for improper financial relationships with Kerlan Jobe and an Alabama sports medicine clinic, which HealthSouth’s then-new management self-reported to the government.

"Lining the pockets of physicians corrupts clinical judgment and will not be tolerated," said George Cardona, Acting U.S. Attorney for the Central District of California. "This settlement serves as a reminder that federal health care program beneficiaries’ referrals should be based on quality of care for the patient, not the financial benefit for any physician or healthcare company."

Assistant Attorney General West noted that the investigation was a collaborative effort by the Civil Division of the Justice Department, the U.S. Attorney’s Office for the Central District of California and the Office of Inspector General of the Department of Health and Human Services.

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