A Pennsylvania not-for-profit corporation operating a hospital system in north, central, and western Pennsylvania, and several of its hospitals, have agreed to pay the United States $735,000 to resolve a lawsuit alleging False Claims Act (FCA) infringement through the submission of claims to Medicare and Medicaid resulting from violations of the Physician Self-Referral Law. United States Attorney Eric G. Olshan announced the settlement on May 28, 2024.
The Physician Self-Referral Law, commonly known as the Stark Law, prohibits a medical provider from billing Medicare or Medicaid for certain services referred by physicians with whom it has a financial relationship, unless that relationship satisfies one of the law’s statutory or regulatory exceptions. The Stark Law is intended to ensure that medical decision-making is not compromised by improper financial incentives and is instead based on the best interests of the patient.
The United States alleged that, from July 1, 2009, through June 30, 2012, the hospital system violated the Stark Law by paying improper compensation to a referring physician and to a physician employed by his practice. The payment, totaling $420,000, occurred under a Consulting, Medical Director, and Related Services Agreement for “employment services” allegedly performed before the agreement went into effect, during a period when neither physician was employed by the hospital system.
The settlement stems from a whistleblower complaint filed in October 2016 by three medical providers formerly employed by the hospital system pursuant to the qui tam provisions of the FCA. The FCA permits the government to intervene and take over the lawsuit, as it did in this case in regard to some of the relators’ allegations.
Compliance Perspective
Issue
The Stark Law prohibits healthcare providers from billing Medicare for certain designated health services referred by a physician with whom the provider has a financial relationship, including a compensation arrangement, that does not meet any statutory or regulatory exception. Financial relationships include both ownership/investment interests and compensation arrangements. Congress enacted the Stark Law to protect Medicare patients from financial arrangements that can adversely impact physicians’ decision making and lead to unnecessary services. Claims knowingly submitted to Medicare in violation of the Stark Law also violate the federal FCA. If a defendant is found liable for violating the FCA, the United States may recover three times the amount of its losses plus applicable penalties.
Discussion Points
- Review policies and procedures to ensure they align with Stark Law requirements regarding referrals. Update as needed.
- Train staff on the Stark Law and the importance of accurate referral practices. Emphasize that referrals should be based on the needs of residents and not influenced by financial incentives. Include information on how to identify and report inappropriate referral arrangements, and stress that prompt reporting is mandatory. Document that the training occurred and place in each employee’s education file.
- Periodically perform audits to assess compliance with referral protocols. Review referral documentation to ensure adherence to Stark Law guidelines. Address any discrepancies promptly to maintain compliance.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
