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Preet Bharara, the United States Attorney for the Southern District of New York, Scott J. Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General’s (“HHS-OIG”) New York Region, and Diego Rodriguez, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that the United States has settled civil fraud claims under the False Claims Act against WESTCHESTER COUNTY HEALTH CARE CORPORATION d/b/a WESTCHESTER MEDICAL CENTER (“WMC”) related to WMC’s alleged violations of the Anti-Kickback Statute and the Stark Law and submission of costs reports to Medicare seeking reimbursement for charges WMC did not incur. In connection with the settlement, which was approved by U.S. District Judge Lewis A. Kaplan on May 14, 2015, the defendant agreed to pay a total of $18,800,000 to resolve its liabilities, and made admissions as to its conduct.
Manhattan U.S. Attorney Preet Bharara said: “The conduct of Westchester Medical Center is the reason the Anti-Kickback Statute and the Stark Law are so important – they are laws that help to rid the healthcare industry of conflicts that can improperly influence medical judgment, potentially jeopardizing patient care and causing federal healthcare programs to pay for excessive or unnecessary treatments. Hospitals and medical practices have an obligation to patients, and taxpayers, to ensure their arrangements conform to the requirements of these laws.”
HHS-OIG Special Agent in Charge Scott J. Lampert said: “Westchester Medical Center’s aggressive, intricate kickbacks and other fraud schemes in this case threatened the impartiality of medical referrals, the financial integrity of Medicare, and the public’s trust in the health care system. Our agency will continue to investigate those who seek to cheat federal health care programs.”
FBI Assistant Director-in-Charge Diego Rodriguez said: “Westchester Medical Center participated in a coordinated shakedown of Medicare and, by extension, taxpayers. Today, they agreed to pay more than $18 million to resolve their liabilities and enable this government program to serve the seniors it was designed to help.”
According to the complaint-in-intervention filed in Manhattan federal court:
WMC operates a tertiary and quaternary care hospital in Valhalla, New York, and serves as the primary clinical affiliate of New York Medical College. From approximately 2000 through 2007, WMC maintained a financial relationship with Cardiology Consultants of Westchester, P.C. (“CCW”), a cardiology practice formerly operating on WMC’s Valhalla campus, which violated the Anti-Kickback Statute and the Stark Law. In particular, the complaint-in-intervention alleges that WMC advanced monies to CCW to open a practice for the express purpose of generating referrals to the hospital. When CCW began making payments to WMC purportedly repaying the advances, WMC entered into retroactive, no-work consulting agreements under which it paid CCW tens of thousands of dollars. Further, the complaint-in-intervention alleges that around this same time, WMC also began permitting CCW to use WMC’s fellows in CCW’s private office free of charge, contrary to WMC’s historic practice. As a result, WMC’s submission of claims to the Medicare Program for services rendered to patients referred to WMC by CCW’s shareholder physicians violated the False Claims Act. Additionally, during the same time period, through cost reports filed with the Centers for Medicare and Medicaid Services (“CMS”), WMC wrongly sought and obtained reimbursement for certain costs that WMC did not incur and that were not reimbursable under the relevant cost-reporting rules.
Under the Medicare Program, CMS makes payments to hospitals for inpatient and outpatient services after the services are rendered. Hospitals, like all healthcare providers, are required to comply with the Anti-Kickback Statute and the Stark Law, and in both cases, are prohibited from submitting claims tainted by such violations to the Medicare Program.
The Anti-Kickback Statute makes it illegal for a hospital to knowingly and willfully offer or pay remuneration to any person to induce that person to purchase, order, or recommend purchasing or ordering any good or item for which payment may be made under a federal health care program. The Anti-Kickback Statute arose out of congressional concern that remuneration given to those who can influence health care decisions would result in goods and services being provided that are medically unnecessary, of poor quality, or harmful to a vulnerable patient population.
The Stark Law provides that the government will not pay for certain designated health services prescribed by physicians who have improper financial relationships with entities to whom they refer patients because such financial relationships can compromise the physicians’ professional judgment as to whether a service is medically necessary, safe, effective, and of good quality.
As part of today’s settlement, WMC admitted the following conduct:
WMC also agreed to pay $18,800,000 to resolve its liabilities for this conduct.
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Mr. Bharara praised the investigative work of the agents at HHS-OIG and expressed appreciation for their dedication to the case. Mr. Bharara also praised the investigative work of the FBI.
The case is being handled by the Office’s Civil Frauds Unit. Assistant United States Attorneys Rebecca C. Martin and Christine Schessler Poscablo are in charge of the case.