On June 25, the U.S. Court of Appeals for the Eighth Circuit affirmed the dismissal with prejudice of a qui tam False Claims Act (FCA) suit alleging certain physician compensation arrangements at Trinity Health violated the Anti-Kickback Statute (AKS) and Stark Law.

The relator, a former surgeon at one of Trinity’s hospitals, alleged the following:

  1. Trinity paid five of its highest-earning physicians above fair market value by compensating them in excess of 90th percentile compensation for their specialties at levels not justified by their personal productivity.
  2. The high compensation generated practice losses for Trinity absent taking into account the physicians’ downstream referrals to the health system.
  3. As a result of the physicians’ compensation methodology, they performed unnecessary surgeries to inflate their compensation.
  4. Trinity opted not to renew the relator’s contract because he complained about these allegedly-unnecessary surgeries.


Continue Reading Eighth Circuit Affirms Dismissal of Kickback Case

Bass, Berry & Sims is pleased to announce the release of the 2019 edition of its Healthcare Fraud & Abuse Annual Review. Compiled by the firm’s Healthcare Fraud Task Force​​​​​​​, the Review is an in-depth and comprehensive analysis of enforcement settlements, court decisions, and recent developments affecting the healthcare industry.

The Review details

On December 20, 2019, the U.S. Court of Appeals for the Third Circuit granted in part a petition for rehearing filed by the University of Pittsburgh Medical Center (UPMC) in a False Claims Act (FCA) case that has generated considerable attention among hospitals and health systems due to its treatment of commonplace, productivity-based physician compensation models.  Ultimately, the Third Circuit vacated its original September 17, 2019 decision and issued a revised opinion reversing its holding that the relators could establish a problematic indirect compensation arrangement simply by alleging the employed neurosurgeons’ pay for personally performed services correlated with the volume or value of their referrals to UPMC’s facilities for the corresponding hospital services.

As discussed in our October 14 post, U.S. ex rel. Bookwalter v. UPMC involved employment arrangements between UPMC’s subsidiary physician practice entities and various neurosurgeons pursuant to which the physicians earned base salaries and potential incentive bonuses tied to their personally performed work relative value units (wRVUs).  The Third Circuit previously held – in reliance on a controversial construction of the Stark Law’s “volume or value” test – that the relators pleaded facts sufficient to demonstrate the surgeons’ compensation both varied with and took into account the volume or value of their designated health service referrals to UPMC’s hospitals, thereby creating an impermissible indirect compensation arrangement.


Continue Reading Update: Third Circuit Allows Allegations of Improper Compensation under the Stark Law to Proceed, but Reverses Controversial “Varies with Volume or Value” Reasoning

We recently outlined the significant proposed changes to the Stark Law that the Centers for Medicare & Medicaid Services (CMS) released on October 9.  The analysis was written for the American Health Lawyers Association’s (AHLA) Fraud and Abuse Practice Group and co-authored by Dickinson Wright attorney Rose Willis. In the article, the authors summarized the Proposed Rule, including:

  1. Changes related to a value-based care delivery model – With the ongoing shift from the traditional fee-for-service model to value-based payment and delivery model, the Proposed Rule addresses three new exceptions to the Stark Law focused on the value-based model.
    Continue Reading CMS Proposed Rule Adds Exceptions to Stark Law and Provides Additional Guidance and Clarification

The U.S. Court of Appeals for the Third Circuit recently issued a False Claims Act (FCA) decision calling into question productivity-based physician compensation structures under the Stark Law, in reliance on a controversial interpretation of the Stark Law’s “volume or value” standard.

The case, U.S. ex rel. Bookwalter v. UPMC, involved employment arrangements between the University of Pittsburgh Medical Center’s (UPMC) subsidiary physician practice entities and neurosurgeons who performed procedures at UPMC’s affiliated hospitals.  The decision is significant for hospitals and health systems in that the Third Circuit’s holding is contrary to guidance promulgated by the Centers for Medicare & Medicaid (CMS) and appears to call into question a common compensation methodology used by health systems to compensate physicians.


Continue Reading Third Circuit Holds Allegations of Improper Compensation Methodologies under the Stark Law Survive Motion to Dismiss

Download Annual Healthcare Fraud & Abuse ReviewBass, Berry & Sims is pleased to announce the release of its seventh annual Healthcare Fraud and Abuse Review. The Review, compiled by the firm’s Healthcare Fraud Task Force, is an in-depth and comprehensive review of enforcement settlements, court decisions and developments affecting the healthcare industry.

The Review is intended to assist healthcare

On August 2, 2018, DOJ announced that Detroit-based Beaumont Health would pay $84 million to settle claims that between August 31, 2004, and January 31, 2012, its arrangements with eight physicians violated the Anti-Kickback Statute (AKS) and the Stark Law by providing improper remuneration in the form of free or below-market value office space and employees and providing them with compensation in excess of fair market value.  The settlement agreement also settles claims that from 2006 to 2012, Beaumont misrepresented that one of its CT radiology centers qualified as an outpatient department of the hospital.  As part of the settlement, Beaumont is entering into a five-year Corporate Integrity Agreement, during which time its referral arrangements will be reviewed by an independent review organization.

Continue Reading Detroit Health System Pays $84 Million to Settle AKS/Stark Claims

Physician employment arrangements with hospitals have remained a significant area of regulatory scrutiny in recent months with the announcement of several high profile settlements and decisions in key FCA cases involving Stark and AKS-related issues.

In July 2016, DOJ announced a $17 million settlement in U.S. ex rel. Hammett v. Lexington County Health Services District.  The lawsuit resolved allegations that Lexington County Health Services District, Inc. d/b/a Lexington Medical Center (LMC) in West Columbia, South Carolina violated the Stark Law and FCA by acquiring physician practices and employing physicians on terms that were in excess of fair market value and on terms that were not commercially reasonable.


Continue Reading FCA Issues to Watch: FCA Claims Concerning Physician Compensation

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.


Continue Reading SC Hospital Pays $17 Million to Resolve FCA Claims of Improper Physician Employment Relationships

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