Texas-based hospital chain Tenet Healthcare Corporation and two of its Atlanta-area hospitals, Atlanta Medical Center and North Fulton Hospital, have agreed to pay more than $513 million to resolve civil and criminal claims related to violations of the federal False Claims Act (FCA) and Anti-Kickback Statute (AKS). Settlement of the underlying cases, which are styled U.S. ex rel. Williams v. Health Management Associates Inc., No. 3:09-cv-00130 (M.D. Ga.) and U.S. v. Atlanta Medical Center, Inc. No. 16-cr-00350 (N.D. Ga), are one of the largest FCA and AKS settlements this year.

On October 3, 2016, the United States filed a bill of information charging Atlanta Medical and North Fulton with one count of conspiracy to defraud the United States and pay and receive kickbacks and bribes. The government alleged that, from 2000 to 2013, Atlanta Medical and North Fulton paid prenatal clinics providing medical services to women (many of whom were undocumented, uninsured and indigent) for referrals for labor and delivery, postnatal, and infant services.  According to the government, business documents show that these referrals resulted in “extremely generous” Medicaid reimbursements and a profitable relationship between the hospitals and the clinics.
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On July 28, 2016, the Department of Justice announced a $17 million settlement in the matter of United States ex rel. Hammett v. Lexington County Health Services District, Case No. 3:14-cv-03653 (D. S.C.).1 The lawsuit resolved allegations that Lexington County Health Services District, Inc. d/b/a Lexington Medical Center (“LMC”) in West Columbia, SC violated the Stark Law and False Claims Act by acquiring physician practices or employing twenty-eight (28) physicians on terms that were in excess of fair market value and on terms that were not commercially reasonable.

The case was filed on September 15, 2014, and DOJ declined to intervene on September 16, 2015. Relator then continued with the case, resulting in the recently announced settlement.  As part of the settlement, LMC also entered into a Corporate Integrity Agreement with the Department of Health and Human Services-Office of the Inspector General.


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DOJ recently reached settlements in connection with three long running enforcement efforts, amassing more than $1 billion in settlement funds. These settlements reflect the continued expansion of aggressive government enforcement in the healthcare industry. Since January 2009, DOJ claims recovery of more than $16.2 billion in healthcare-related FCA cases alone.

Swiss pharmaceutical company Novartis AG agreed to pay $390 million to settle allegations that it provided unlawful rebates to specialty pharmacies to boost prescription refills for Novartis products. While Novartis did not admit that these rebates constituted illegal kickbacks, it did acknowledge providing rebates to three specialty pharmacies to incentivize an increase of prescription refills. This settlement comes at the conclusion of Novartis’ five-year CIA resulting from a settlement with DOJ in 2010. As part of its latest settlement, Novartis has agreed to extend its CIA for an additional five year period. Additionally, Novartis has agreed to amend its CIA to include obligations covering the company’s interactions with specialty pharmacies and to provide an annual report to DOJ detailing Novartis’ compliance with the CIA.


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In addition to the most common grounds upon which dismissal is sought in FCA actions, Mount Sinai Hospital and Mount Sinai Radiology Associates recently requested that the district court throw out FCA claims based on their argument that relators relied on improperly obtained patient records in support of their allegations.  Relators, who were employed in various positions with defendants, alleged FCA violations based upon false and fraudulent billing in connection with physician services and attached patient medical records to their complaint in support of their FCA claims. Defendants argued that relators should be precluded from relying on the medical records attached to their complaint because allegedly relators obtained those records without authorization following an internal investigation at the Hospital.  Relators countered that there were no facts before the district court to support any assertion that the medical records were obtained improperly and cited HIPAA’s exception for whistleblowers to reveal information to government authorities and private counsel if those whistleblowers have a good faith belief that their employer engaged in unlawful conduct.
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On October 16, 2015, Tuomey Healthcare agreed to pay more than $74 million to resolve a $237 million judgment in a long-standing FCA matter that had threatened to bankrupt the nonprofit hospital. The action, styled U.S. ex rel. Drakeford v. Tuomey Healthcare Systems, Inc., No. 05-2858 (D.S.C.), involved FCA allegations that Tuomey employed and

What do the recent multimillion dollar FCA settlements tell healthcare providers about physician compensation arrangements? Standing alone, these settlements are cautionary examples of arrangements that may subject hospitals and physicians to increased scrutiny. These settlements, however, come on the heels of the recent OIG fraud alert – “Physician Compensation Arrangements May Result in Significant Liability,”

In a welcomed move, CMS has proposed changes to the federal physician self-referral law (Stark Law) designed to improve consistency and interpretability and alleviate the number of technical violations leading to self-disclosures. This move is in stark (pun-intended) contrast to the stringent interpretation of the Stark Law by the Fourth Circuit in its decision in

On March 31, 2015, DOJ announced a $10 million settlement with Robinson Health System Inc. (Robinson), a nonprofit operator of 10 Northeast Ohio healthcare facilities, including Robinson Memorial Hospital.

The settlement, announced a day before Robinson finalized a transaction involving its flagship hospital, stems from a June 2014 self-disclosure to the U.S. Attorney for the Northern District of Ohio, in which Robinson disclosed questionable financial relationships under Stark and the AKS, some dating back nearly 10 years, with more than 30 referring physicians. This self-disclosure stemmed from a due diligence review conducted while searching for a partner health system.


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On February 25, 2015, the Sixth Circuit reversed a district court’s decision to dismiss FCA allegations pursuant to the FCA’s public disclosure bar because the “publicity” aspect of the public disclosure bar was not satisfied.   The Sixth Circuit’s opinion became the most recent appellate decision to require disclosure beyond the government or the government’s agents or contractors to implicate the public disclosure bar.

In U.S. ex rel. Whipple v. Chattanooga-Hamilton County Hosp. Authority, OIG instituted an audit of the defendant’s billing practices in response to an anonymous complaint.  That audit led to a subsequent investigation by OIG, during which it consulted with the DOJ.  In 2009, the defendant resolved the matter through a refund to the government, and the government declined to pursue the matter further.


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