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.
Among the relationships at issue, two physician-owned entities with which Robinson had management agreements were unable to document that they had performed sufficient services under those agreements, which called into question the compensation they received from Robinson. Also, certain leases and service agreements Robinson had with several referring physicians had lapsed, were missing signatures, or were not reduced to writing. In addition, the entities with which Robinson had management agreements had ownership structures that may have provided their respective physician–owners with improper financial incentives to refer patients to Robinson.
Robinson also disclosed potential problems with a leasing and professional services arrangement it entered into with certain physicians’ groups. Those arrangements may have included financial terms that could be construed as involving remuneration to induce or reward referrals from those physicians.
This settlement highlights the importance of scrutinizing referral relationships, particularly in connection with potential transactions among healthcare providers. As evidenced by the 10 months that passed between Robinson’s self-disclosure and the announcement of the settlement with DOJ, it also highlights the need to account for the fact that resolution of such issues can be a lengthy process that would threaten to bog down potential transactions.