By: Gerald V. Burke, M.D., Esq.
Here we go again. Two more large, corporate healthcare entities have received stiff government fines for violating the Stark Law and the False Claims Act.
In the first matter, the Olympus Corporation of America, the United States' largest distributor of surgical scopes commonly used in medical procedures, recently agreed to pay $623.2 million to resolve criminal and civil claims that its agents paid bribes and kickbacks to boost sales. The company's agents paid bribes and kickbacks to doctors and hospitals from 2006 through 2011.
Gifts by the company's sales force included cash, paid for overseas trips, expensive meals and events, and provided spa treatments to doctors, hospital officials and other medical professionals in return for purchasing Olympus' equipment. It also offered "research grants" to hospitals in return for purchases.
During the time in question, the Olympus Company operated without a single compliance officer to guard against this illegal activity. Coincidentally, the whistleblower who reported the company was the company's first compliance officer, who filed a whistleblower suit in 2010 in New Jersey federal court. He will receive more than $51 million from the criminal and civil settlements.
The $623 million from Olympus will be the largest amount paid in US history for violations of the Anti-Kickback Statute. Olympus only realized gross profits of $230 million from these improper sales. The Anti-kickback Statute prohibits payments to induce purchases through federal healthcare programs such as Medicare and Medicaid.
In a separate incident, the Justice Department announced on January 15, 2016 that Tri-City Medical Center, a hospital located in Oceanside, California, has agreed to pay $3,278,464 to resolve allegations that it violated the Stark Law and the False Claims Act by maintaining financial arrangements with community-based physicians and physician groups that violated the Medicare program's prohibition on financial relationships between hospitals and referring physicians.
The Stark Law generally forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the hospital unless that relationship falls within an enumerated exception. The exceptions generally require, among other things, that the financial arrangements do not exceed fair market value, do not take into account the volume or value of any referrals and are commercially reasonable. In addition, arrangements with physicians who are not hospital employees must be set out in writing and satisfy a number of other requirements.
The settlement resolves allegations that Tri-City Medical Center maintained 97 financial arrangements with physicians and physician groups that did not comply with the Stark Law. The hospital identified five arrangements with its former chief of staff from 2008 until 2011 that, in the aggregate, appeared not to be commercially reasonable or for fair market value. The hospital also identified 92 financial arrangements with community-based physicians and practice groups that did not satisfy an exception to the Stark Law from 2009 until 2010 because, among other things, the written agreements were expired, missing signatures or could not be located.
This settlement illustrates the government's emphasis on combating healthcare fraud and marks another achievement for the Healthcare Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $27.1 billion through False Claims Act cases, with more than $17.1 billion of that amount recovered in cases involving fraud against federal healthcare programs.
If you have any questions regarding your relationships with healthcare providers that may draw the scrutiny of the HEAT task force, a full review by a healthcare attorney is indicated.
