A former Texas hospital chief executive officer (CEO) has agreed to pay $5,343,630 to resolve allegations under the False Claims Act involving illegal payments to physicians for laboratory referrals in violation of the Anti-Kickback Statute. The CEO has also agreed to cooperate with the Justice Department’s investigations and litigation against other participants in the alleged schemes.
The settlement resolves allegations in a lawsuit alleging that the former CEO of a critical access hospital in Rockdale, Texas, caused the submission of false claims for laboratory testing to Medicare, Medicaid, and TRICARE from January 2015 to June 2018. The CEO allegedly participated in a kickback scheme in which the hospital paid commissions to recruiters. These recruiters, using purported management service organizations (MSOs), allegedly provided kickbacks to doctors to incentivize their laboratory testing referrals to the hospital. The settlement also resolves claims that the CEO knowingly signed and caused others to sign false certifications in Medicare cost reports, which misrepresented the hospital’s compliance with the Anti-Kickback Statute, resulting in false claims to federal healthcare programs.
In addition, the settlement resolves allegations in the same lawsuit that, after a Texas physician informed the hospital of his potential laboratory testing referral volume, the CEO agreed to pay the physician $2,000 per month in kickbacks disguised as purported medical director fees from February 2015 to May 2017. This arrangement aimed to induce the physician to direct his laboratory testing referrals to the hospital, despite the hospital not receiving any genuine medical director services from him.
The CEO did not contest, and accepted responsibility for, the allegations against him in the United States’ amended complaint. Under the terms of the settlement agreement, the CEO has been excluded from participating in federal healthcare programs for 25 years.
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 healthcare programs. This statute is designed to ensure that medical providers’ judgments remain uncompromised by improper financial incentives and are instead guided by the best interests of their patients. Kickbacks to physicians from laboratories or other healthcare providers can undermine healthcare decision-making, subject patients to unnecessary medical services and waste taxpayer funds.
Discussion Points
- Review and update policies and procedures for preventing and reporting anti-kickback violations and false claims. Implement a Triple Check Process to verify the accuracy of Medicare claims.
- Train all staff on federal and state anti-kickback statutes and what constitutes a kickback. Provide initial training upon hire and at least annually on compliance and ethics procedures, including what qualifies as a false claim. Ensure that training includes information on reporting concerns and suspected violations, emphasizing that prompt reporting is mandatory. Document all training sessions and maintain records in each employee’s education file.
- Conduct regular audits to assess staff understanding of procedures for reporting suspected illegal kickbacks or false claims, whether intentional or unintentional. Implement routine audits of documentation and billing practices to prevent and detect errors before they escalate into false claims.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
