A cardiac imaging company headquartered in Illinois, and its founder, a resident of Florida, have agreed to pay a total of $85,480,000, to resolve False Claims Act allegations that they paid referring cardiologists excessive fees to supervise PET scans in violation of the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (Stark Law). The US Attorney’s Office for the Southern District of Texas issued a press release announcing the settlement on October 10, 2023.
The United States alleged that between March 1, 2014, and May 31, 2023, the company and its founder knowingly caused false or fraudulent claims to federal healthcare programs arising from violations of the AKS and the Stark Law. Specifically, with the founder’s oversight and approval, the company allegedly paid kickbacks to referring cardiologists in the form of above-fair market value fees of $500 or more per hour, ostensibly for the cardiologists to supervise the PET scans for the patients they referred to the company. The United States alleged these fees substantially exceeded fair market value for the cardiologists’ services because the company paid the referring cardiologists for each hour the company spent scanning the cardiologists’ patients, including time the cardiologists were away from the company’s mobile scanning units providing care for other patients or were not even on site.
The company’s fees also purportedly compensated the cardiologists for additional services beyond supervision that were not actually provided. The company purported to rely on a consultant’s fair market value analysis that the US government contends it knew was premised on fundamental inaccuracies about the services referring physicians provided and that the consultant ultimately withdrew.
In terms of the settlement, the company agreed to pay $75 million plus additional amounts based on future revenues, while the founder agreed to pay $10,480,000. This is the largest single district civil settlement in the history of the Southern District of Texas (SDTX).
The company and its founder also entered into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (DHHS-OIG). The CIA requires, among other compliance provisions, that the company implement measures designed to ensure that arrangements with referring physicians are compliant with the AKS and the Stark Law. The CIA also requires that the company implement a centralized annual risk assessment and internal review process to identify and address the AKS and the Stark Law risks associated with arrangements and retain an Independent Review Organization to perform a systems and transactions review of arrangements.
“Healthcare providers that pursue patient referrals through illegal kickbacks and other unlawful financial arrangements will be held accountable,” said Principal Deputy Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to safeguard federal healthcare funds by rooting out financial relationships between healthcare providers and referring physicians that can corrupt medical decision making and increase the cost of care.”
Compliance Perspective
Issue
The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs. The Physician Self-Referral Law, commonly known as the Stark Law, prohibits healthcare providers from billing Medicare for certain services referred by physicians with whom the provider has an improper financial arrangement, including the payment of compensation that exceeds the fair market value of the services actually provided by the physician. Both the Anti-Kickback Statute and the Stark Law are intended to ensure that physicians’ medical judgments are not compromised by improper financial incentives and instead are based on the best interests of their patients. Claims submitted under the Anti-Kickback Statute and the Stark Law violate the False Claims Act. Staff who provide skilled services must understand what constitutes reasonable and necessary skilled services. The skilled services must be based upon a patient’s ability, need, and what is reasonable for the patient. Staff should be knowledgeable and aware of what may be considered a false claim. Failure to promptly report a false claim or kickback can result in citations, fines, and other sanctions.
Discussion Points
- Review policies and procedures for preventing and reporting false claims and kickbacks. Also review your policies and procedures on determining if skilled rehabilitation services are reasonable and necessary. Update as needed.
- Train staff on federal and state anti-kickback statutes and what can be considered a kickback. Include information on how to report concerns and suspected violations, and make sure staff know that prompt reporting is mandatory. Provide education to nursing and business office personnel on their responsibility to identify and report any concerns that unnecessary medications, treatments, supplies, or equipment are being ordered for residents. Document that the trainings occurred and place in each employee’s education file.
- Periodically perform audits to ensure all staff are aware of their responsibility to identify and report compliance and ethics concerns and understand that it is their responsibility to report violations to their supervisor, the compliance officer, or via the anonymous hotline. Conduct audits of documentation and billing routinely to prevent and detect errors before they progress to a false claim.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
