Missouri Hospital Agrees to Pay United States $5.5 Million to Settle Alleged False Claims Act Violations
Two Southwest Missouri health care providers have agreed to pay the United States $5.5 million to settle allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department announced today. The two providers are Mercy Health Springfield Communities, formerly known as St. John’s Health System Inc., which owns and operates a hospital in Springfield, Missouri, and its affiliate, Mercy Clinic Springfield Communities, formerly known as St. John’s Clinic, which operates health care facilities in southwest Missouri.
“Financial relationships between heath care providers and their referral sources must be structured to comply with all applicable laws,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division. “When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone. In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”
“This settlement protects patients and the public by enforcing the federal protections against illegal profit incentives for physicians,” said U.S. Attorney Tammy Dickinson of the Western District of Missouri. “A bonus structure that rewards physicians based on the value of their referrals is detrimental to both the quality and the cost of health care. Patients deserve assurances that they are receiving appropriate medical care, unbiased by hidden incentives. And taxpayers deserve assurances that the cost of public health care programs is not inflated by unnecessary procedures and services.”
“Health care organizations paying physicians based on referrals – as alleged in this case – undermines public trust in medical institutions and the financial integrity of federal health care programs,” said Special Agent in Charge Gerald T. Roy of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We will aggressively pursue organizations that engage in conduct detrimental to taxpayers and government health programs.”
The settlement announced today resolved allegations that the defendants submitted false claims to the Medicare program for services rendered to patients referred by physicians who received bonuses based on a formula that improperly took into account the value of the physicians’ referrals of patients to the clinic. Federal law restricts the financial relationships that hospitals and clinics may have with doctors who refer patients to them.
The allegations settled today arose from a lawsuit filed by a whistleblower, Dr. Jean Moore, a physician who is employed by one of the defendants, under the qui tam provisions of the False Claims Act. Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. Dr. Moore will receive $825,000 from the recovery announced today.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24.9 billion through False Claims Act cases, with more than $15.9 billion of that amount recovered in cases involving fraud against federal health care programs.
The case, United States ex rel. Moore v. Mercy Health Springfield Communities f/k/a St. John’s Health System, Inc., et al., Case No. 13-3019-CV (W.D. Mo.), was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Western District of Missouri and HHS-OIG. The claims settled by this agreement are allegations only, and there has been no determination of liability.