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    United States Attorney's Office
    Central District of California

    Thom Mrozek
    Public Affairs Officer

    (213) 894-6947
    thom.mrozek@usdoj.gov



    Return to the 2009 Press Release Index
    Release No. 09-140

    December 1, 2009

    KERLAN-JOBE ORTHOPAEDIC CLINIC AGREES TO PAY $3 MILLION TO SETTLE KICKBACK ALLEGATIONS


    LOS ANGELES – The Kerlan-Jobe Orthopaedic Clinic, a sports medicine clinic with offices across the Los Angeles area, 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 (see: http://www.justice.gov/archive/opa/pr/2007/December/07_civ_1007.html).

    “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.”

    Kerlan-Jobe has two weeks to pay the $3 million settlement.

    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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    Release No. 09-140
    Return to the 2009 Press Release Index