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BOSTON – The U.S. Attorney’s Office has filed a complaint under the False Claims Act against Steward St. Elizabeth’s Medical Center of Boston, Inc. (SEMC); Steward Medical Group, Inc. (SMG); and Steward Health Care System, LLC (Steward) alleging that they violated the Physician Self-Referral Law (commonly referred to as the “Stark Law”) and submitted and caused the submission of false claims and statements to the Medicare program. Steward – the owner of SMG and SEMC – is an integrated healthcare system and one of the largest, private, for-profit health care networks in the nation.
Congress enacted the Stark Law to protect against physicians’ financial relationships from impacting their medical decision-making for Medicare patients. Relevant to this case, the Stark Law prohibits a hospital from billing Medicare for services referred by a physician with whom the hospital has an improper compensation relationship. The Stark Law protects patients and the Medicare program from physicians’ financial relationships leading to unnecessary overutilization of services or increased costs.
In 2012, SMG recruited Dr. Agnihotri, a cardiac surgeon, to serve as the Chief of Cardiac Surgery at SEMC. The government alleges that the defendants recruited Dr. Agnihotri because they wanted to increase the number of cardiovascular surgeries at SEMC in Boston, as a means to grow their profits via reimbursement from Medicare and other insurers. The government’s complaint alleges that, from January 2013 through March 2022, SMG paid Dr. Agnihotri compensation that exceeded fair market value as well as incentive compensation that varied based on, and took into account, the volume or value of his referrals to SEMC. Specifically, the amount of incentive compensation that SMG allegedly paid to Dr. Agnihotri varied based on the number of surgeries that Dr. Agnihotri referred to SEMC. It is alleged that SMG paid Dr. Agnihotri approximately $4,868,500 in incentive compensation that it calculated by including as a variable the number of cases Dr. Agnihotri referred to SEMC. The complaint alleges that Dr. Agnihotri made referrals to SEMC in violation of the Stark Law and SEMC submitted over 1,000 claims to Medicare knowing that the claims for those referred services were not eligible for payment. As a result, Medicare mistakenly paid tens of millions of dollars to SEMC for false claims.
“The government’s complaint today alleges that in its drive to increase cardiac surgeries at SEMC, the defendants entered into improper compensation arrangements with a cardiac surgeon, and knowingly submitted false claims to Medicare,” said Acting United States Attorney Joshua S. Levy. “We are committed to enforcing the Stark Law, and protecting patients and the Medicare program from financial relationships that can corrupt clinical decision making.”
“Improper financial arrangements between hospitals and physicians can compromise medical judgement and threaten the integrity of the Medicare program,” said Special Agent in Charge Roberto Coviello of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Working alongside our law enforcement partners, HHS-OIG will continue to thoroughly pursue allegations of Stark Law violations.”
“Health care providers need to ensure that compensation agreements with physicians are appropriate, and the claims they submit to Medicare are based on the clinical needs of patients, not financial ones,” said Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division. “Working with our law enforcement partners, we will continue to investigate deals that we believe could undermine impartial medical judgement, drive up health care costs, and erode the public’s trust in our health care system.”
The government’s investigation was prompted by False Claims Act allegations brought in a lawsuit filed by a whistleblower, under the qui tam provisions of the False Claims Act.
Acting U.S. Attorney Levy, HHS-OIG SAC Coviello and FBI SAC Cohen made the announcement today. The Department of Defense, Office of the Inspector General also assisted in the investigation. Assistant U.S. Attorneys Jessica J. Weber and Andrew A. Caffrey, III of the Affirmative Civil Enforcement Unit are handling the matter.
The claims in which the United States has intervened are allegations only. There has been no determination of liability.