Department of Justice SealDepartment of Justice
Thursday, April 17, 2008
(202) 514-2007
TDD (202) 514-1888

New Orleans Hospital Pays $1.75 Million to Settle False Claims Act Allegations

WASHINGTON – Touro Infirmary, a New Orleans Hospital, has agreed to pay the United States $1.75 million to settle allegations that it submitted false claims to the Medicare program, the Department of Justice announced today.

The United States alleges that between 2000 and 2004, Touro made unlawful payments of $144,000 per year to Dr. Maria Carmen Palazzo, a psychiatrist, in order to induce her to refer patients to the hospital. The payments were made pursuant to a series of consultant and medical directorship contracts that the United States contends were shams intended to disguise kickbacks to Dr. Palazzo. Federal law prohibits the payment of kickbacks or other inducements for referrals of patients participating in federal health care programs. The United States pursued criminal charges against Dr. Palazzo, and on April 16 a jury in the Eastern District of Louisiana returned guilty verdicts on 39 counts of health care fraud against Dr. Palazzo, including 13 counts arising from her contractual relationship with Touro.

“Kickbacks are a blight on the health care system,” said Jeffrey S. Bucholtz, Acting Assistant Attorney General for the Department’s Civil Division. “They corrupt physicians’ medical judgment and lead to overutilization and misuse of taxpayer dollars. We will continue to be vigilant in our efforts to combat this pernicious practice.”

The case was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Eastern District of Louisiana and the Office of Inspector General of the Department of Health and Human Services.