Now that the kids are back in school and summer vacations are in the rearview mirror, it’s time to catch up on recent fraud and abuse developments. The federal government was busy this summer negotiating a pair of settlements under the Stark Law and anti-kickback statute, drafting changes to the Self-Referral Disclosure Protocol (SRDP), and issuing an interim final rule incorporating statutory increases to civil money penalties. This article highlights those recent developments.
Summer Fraud and Abuse Settlements
Lexington Medical Center
On July 20, 2016, Lexington Medical Center (LMC) in South Carolina agreed to pay $17 million and enter into a corporate integrity agreement with the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) to settle allegations that its financial relationships with 28 physicians violated the Stark Law and the False Claims Act. LMC is a public hospital district with over 300 employed physicians. The plaintiff, a former LMC neurologist, alleged that LMC acquired physician practices to capture the physicians’ referrals, and in exchange, LMC paid them commercially unreasonable compensation exceeding fair market value. For example, the plaintiff stated his compensation was $250,000 before the acquisition and topped out at $650,000 during his second year of employment by LMC. The plaintiff also reported that LMC held meetings with the employed physicians to discuss declining imaging referrals and terminated him in July 2013 because he refused to send all imaging referrals to LMC. The second amended complaint alleges that LMC’s arrangements with the plaintiff and other physicians violated the Stark Law because the acquisition and employment agreements provided compensation to the physicians in excess of fair market value, took into account the volume or value of referrals, and were not commercially reasonable. Continue Reading