A Texas company that manages and operates dermatology practices, surgical centers, and pathology laboratories across the United States has agreed to pay $8.9 million to resolve self-reported allegations of potential violations of the Physician Self-Referral Law (Stark Law) and the Anti-Kickback Statute (AKS). The United States contends that these potential violations resulted in liability under the False Claims Act (FCA).
Per the terms of the civil settlement, which was executed on September 12, 2023, the company will pay the government $8,892,079.72, which includes $5,928,053.15 in restitution, within 10 days of the settlement. The settlement credits the company for its self-disclosure and collaboration with government investigators. The self-reported conduct was unknown to the United States at the time of the self-disclosure, and was specific as to the nature of the potentially problematic transactions, the personnel involved, and the potential financial impact on the Government.
According to the settlement agreement, from January 2013 to July 2018, the company acquired numerous dermatology practices across the United States. In September 2021, the company voluntarily self-disclosed to the Department of Justice that it had discovered credible evidence suggesting that former senior managers had offered (or agreed) to increase the purchase price of 11 acquired dermatology practices in exchange for an agreement by the provider at the practice to refer services to company-affiliated entities following the acquisition. Claims for certain of those referred services were later submitted to Medicare for payment.
The United States contends that this conduct violated the AKS and the Stark Law and resulted in the submission of false claims for payment to Medicare.
Compliance Perspective
Issue
The AKS prohibits offering or paying remuneration to induce the referral of items or services covered by Medicare and other federally funded healthcare programs. The Stark Law prohibits healthcare entities from billing for certain services referred by physicians with whom the entity has a financial relationship, unless that relationship satisfies one of the law’s statutory or regulatory exceptions. Both the AKS and the Stark Law are intended to ensure that medical judgments are not compromised by improper financial inducements. An effective compliance and ethics program can reduce the risk of fraud, waste, and abuse of government funds and prevent and detect criminal, civil, and administrative violations while promoting quality of care. Discovery of fraud, waste, or abuse of government funds should be immediately investigated, addressed, and, in collaboration with your compliance attorney, reported using the self-disclosure protocols. Self-disclosure gives providers the opportunity to avoid the costs and disruptions associated with a government-directed investigation and civil or administrative litigation.
Discussion Points
- Review your policies and procedures for operating an effective compliance and ethics program. Ensure that your policies are reviewed at least annually and updated when new information becomes available.
- Train all staff on your compliance and ethics policies and procedures upon hire and at least annually. Document that these trainings occurred and file the signed document in each employee’s education file.
- Periodically perform audits to ensure all staff are aware of compliance and ethics concerns and understand their responsibility to report any suspicion of compliance and ethics violations to their supervisor, the compliance and ethics officer, or via the anonymous hotline.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
