Gregory A. White, United States Attorney for the Northern District of Ohio, today announced that the United States has settled a lawsuit against University Hospitals of Cleveland for $13,880,000. The settlement arose from a federal lawsuit filed under seal by Thomas J. Kirby, M.D., a physician formerly affiliated with University Hospitals. The seal on the lawsuit was lifted by U.S. District Judge Donald C. Nugent on August 18, 2006.

The lawsuit alleged that University Hospitals Health Systems, Inc. and University Hospitals of Cleveland, Inc., entered into illegal financial arrangements with physicians who practice at University Hospitals in order to induce referrals from the physicians to University Hospitals. Kirby alleged that these arrangements were in violation of federal laws which prohibit such agreements. The various laws were passed by Congress in order to prevent the overutilization of Medicare services which were paid by federal monies. Kirby alleged that University Hospitals falsely certified that it was in compliance with these federal healthcare laws which resulted in the submission of false claims to the United States. Under the False Claims Act, a party may be found to have submitted a false claim for payment to the United States if it is determined that the claim was not properly payable and that the party submitting the claim for payment knew that the claim was not properly payable or should have known that the claim was not payable. In addition to the payment of the above amount by University Hospitals, the hospital has agreed to enter into a corporate integrity agreement monitored by the Department of Health and Human Services, Office of Inspector General. University Hospitals has not admitted any wrongdoing.

The lawsuit was brought under the “whistleblower” provisions of the False Claims Act which allows a private citizen to file a lawsuit on behalf of the United States. Under the False Claims Act, the person who filed the suit is entitled to receive a portion of the monies recovered by the United States. Under the terms of the settlement, Dr. Kirby will receive $1,500,000 of the proceeds and additional monies were paid by University Hospitals to his attorneys who filed the action.

The case was litigated by Assistant U.S. Attorney Alex Rokakis and attorneys from the Justice Department, Washington, D.C., and the Office of Counsel to the Inspector General, Department of Health and Human Services. The investigation was jointly conducted by the Office of Inspector General, Department of Health and Human Services and the FBI.