Steward Health Care System Agrees to Pay $4.7 Million to Resolve Allegations of False Claims Act Violations
System’s hospital paid physicians and physician practices for services not performed
BOSTON – Steward Health Care System LLC (Steward) and several related corporate entities have agreed to pay approximately $4.735 million to resolve allegations that its relationships with several physicians and physician practice groups violated federal law, including the False Claims Act. Despite its public denials, in the signed settlement agreement, Steward “admits, acknowledges, and accepts responsibility” for the facts underlying the government’s allegations.
Steward is one of the largest, private for-profit health care networks in the nation and the owner of multiple hospitals in Massachusetts. Steward owns and operates Steward Good Samaritan Medical Center, Inc. (GSMC), a for-profit hospital in Brockton.
According to the settlement agreement, in 2011, GSMC entered into an agreement with Brockton Urology Clinic (Brockton Urology) which obligated Brockton Urology to administer a Prostate Cancer Center of Excellence at GSMC. Steward admits that, since at least January 2012, GSMC had no Prostate Cancer Center of Excellence and Brockton Urology did not provide the services specified in the agreement with GSMC. However, from April 2011 through December 2017, GSMC purportedly paid Brockton Urology pursuant to the agreement and Brockton Urology referred patients to GSMC.
The United States reached a separate settlement agreement with Brockton Urology in February 2022 regarding this conduct.
GSMC entered into a similar agreement with a separate physician practice. Steward paid that physician practice from April 2011 through December 2015, purportedly for cancer center services. During a portion of that time, GSMC had an agreement that obligated the practice to provide a physician to serve as the director of GSMC’s Prostate Cancer Program. Steward admits, however, that the physician practice never provided a physician to serve as the director of GSMC’s Prostate Cancer Program and, in fact, did not perform any of the services specified in the agreement. That practice also referred patients to GSMC.
Over the course of the government’s investigation, Steward disclosed facts concerning two other sets of physician relationships that the United States contends violated federal law. First, in October 2010, Steward entered into a compensation arrangement with a physician pursuant to which the physician agreed to serve as GSMC’s Medical Director of Post-Acute Care Services. Steward admits that it has been unable to confirm that the physician performed the services but that it still paid the physician from November 2010 through June 2016 and that the physician referred patients to GSMC during that period. Second, Steward admits that it failed to charge the proper rent on some of its leases with physicians, physician organizations and non-physician organizations, resulting in some of those entities paying rent below fair market value. Steward admits that between January 2010 and October 2015, it leased real property to these physicians and physician organizations and that those entities were referral sources for Steward’s Massachusetts hospitals.
In connection with the settlement, GSMC has entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), which provides for an annual review of its financial arrangements for compliance with the Anti-Kickback Statute and the Stark Law by an Independent Review Organization.
“This case is about fraud, waste, and abuse by Steward at the expense of the American taxpayers,” said United States Attorney Rachael S. Rollins. “When hospitals like Steward violate the law, we will work tirelessly to recover from them taxpayer money in order to ensure that Medicare and Medicaid funds are going to treat patients instead of supporting fraud.”
“Financial and referral arrangements between hospitals and physician practices that violate federal health care laws undermine the integrity of crucial medical decision-making,” said Phillip M. Coyne, Special Agent in Charge of HHS-OIG. “This settlement is an example of the government’s combined efforts to protect Federal health care programs and their beneficiaries from those who are alleged to have violated these laws.”
“This settlement should serve as a warning to hospitals that they should not pay referring doctors for services that they did not provide,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division. “Here a hospital paid referring physicians under the guise of a bogus cancer center. The FBI is proud to work alongside our partners to make sure hospitals follow the law and to root out fraud anywhere in the system.”
The False Claims Act settlement resolves Steward’s self-disclosures and allegations originally brought by a lawsuit filed by whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties, known as relators, to bring suit on behalf of the government and to share in any recovery. In connection with today’s announced settlement, the relators will receive 17 percent of the recovery.
U.S. Attorney Rollins, HHS-OIG SAC Coyne and FBI SAC Bonavolonta made the announcement today. The Department of Defense’s Office of the Inspector General also provided assistance. Assistant U.S. Attorneys Charles B. Weinograd and Jessica J. Weber of Rollins’ Affirmative Civil Enforcement Unit handled the matter.