Attorney General Jason Ravnsborg announced that South Dakota reached a settlement agreement with Sanford Health resolving a case involving Medicaid payments. As part of the settlement agreement Sanford Health will pay $329,412.21 to South Dakota, fully reimbursing the state’s share of alleged Medicaid damages arising from Medicaid claims filed between January 1, 2010, through June 30, 2019. The settlement is neither an admission of liability by Sanford Health, nor a concession by South Dakota that it’s claims are not well founded. The state’s agreement is related to a federal settlement agreement reached in October 2019, which resolved federal allegations against Sanford Health relating to the federal Anti-Kickback Statute. Where the federal settlement agreement resolved federal Medicaid and other healthcare program damages, the state agreement resolves the state’s share of damages arising from the same conduct.
The October 2019 federal settlement resolved allegations that Sanford Health knew that one of its top neurosurgeons was improperly receiving kickbacks from his use of implantable devices distributed by his physician-owned distributorship (POD). Sanford Health allegedly received warnings from the neurosurgeon’s physician colleagues and others about the alleged kickback scheme and was aware of the heightened compliance risks associated with PODs. In addition, the neurosurgeon’s colleagues and others repeatedly warned Sanford Health that the neurosurgeon was performing medically unnecessary procedures involving the devices in which he had a substantial financial interest. The United States alleged that, despite these repeated warnings, Sanford Health continued to employ the neurosurgeon, continued to allow him to profit from the devices he used in surgeries performed at Sanford Health, and continued to submit claims to federal healthcare programs for these surgeries, including procedures that were medically unnecessary.
As part of the October 2019 federal settlement, Sanford Health, Sanford Medical Center, and Sanford Clinic (collectively, Sanford Health), of Sioux Falls, South Dakota, agreed to pay $20.25 million to resolve federal False Claims Act allegations that they knowingly submitted false claims to federal healthcare programs resulting from violations of the Anti-Kickback Statute and medically unnecessary spinal surgeries. 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.
