South Carolina Hospital Hit With $40 Million Verdict For Illegal Kickbacks

162017_132140396847214_292624_nAfter four weeks of trial in the United States District Court for the District of South Carolina, on May 8, 2013 a South Carolina hospital was found to have paid illegal kickbacks to 19 doctors and wrongfully billed Medicare almost $40 million between 2005 and 2009 to have the doctors continue to provide procedures at the hospital. The jury found against the hospital in the amount of $39.3 million. The federal government had alleged that the hospital entered into expensive part-time contracts with the doctors in 2005 and had paid the doctors with a portion of the referral fees that the hospital received from the doctors’ procedures.

The federal government argued that despite the fact that the contracts with the doctors did not mention referral fees, the contracts were so much above fair market value that the doctors were being paid by the referral fees. Medicare law forbids the payment of illegal kickbacks such as referral fees and therefore the federal government was seeking reimbursement from the hospital for Medicare claims between 2005 and 2009.

The defendant hospital argued to the jury that the contracts with the doctors were legal and represented its efforts to make sure that the procedures provided by the doctors remained available to the under-served community for which the hospital provides services. The defendant hospital further argued that it relied on the legal advice of its attorney and therefore even if the contracts with the doctors were found to be illegal, it should not be held responsible.

The hospital’s reliance-on-legal-advice defense evidently fell short with the jury after it heard that the hospital had jointly hired (along with a local orthopedic surgeon) an attorney who was the former chief of the Industry Guidance Branch of the Office of Counsel to the Inspector General of the Department of Health and Human Services, to review the proposed part-time contracts in September 2005. Although the attorney never put his opinions in writing, he evidently had expressed his reservations about the contracts to the hospital, after which his association with the hospital was terminated. The hospital argued to the jury that it terminated its association with this attorney because it felt that he was biased toward the position of the orthopedic surgeon concerning the part-time contracts.

The local orthopedic surgeon had originally filed the federal lawsuit against the hospital under the False Claims Act and will therefore be entitled to share in a portion of the recovery that the federal government may ultimately receive from the lawsuit (the orthopedic surgeon has stated that any amount that he may receive as a result of the federal lawsuit will be donated to charitable health care efforts in the local community).

Source

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This entry was posted on Saturday, May 11th, 2013 at 12:48 pm. Both comments and pings are currently closed.

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