Anti-Kickback and Stark Law Whistleblower Suit Results in $24.5 Million Settlement

The Department of Justice released a statement on Monday July 21, 2014 discussing a recent $24.5 million settlement with Alabama-based Infirmary Health System Inc. (IHS), two IHS-affiliated clinics and Diagnostic Physicians Group, P.C. (DPG).  The settlement resolved a lawsuit alleging violations of the False Claims Act as a result of claims submitted in violation of the Anti-Kickback Statute and the Stark Law.

The government’s lawsuit, which was initiated by a whistleblower, alleged that the hospital affiliated clinics entered into an agreement to pay the physician group a share of the clinic revenues, including revenue from diagnostic imaging and laboratory tests referred by the physician group.    The whistleblower, a physician formerly employed by DPG, will receive $4.41 million as his share of the settlement.

The Anti-Kickback statute prohibits individuals from offering, paying, soliciting or receiving anything of value to induce or reward referrals or generate business payable by a Federal health care program.  The Stark Law, subject to certain exceptions, prohibits a physician from referring Medicare patients for “designated health services” to an entity with which the physician (or the physician’s immediate family member) has a financial relationship.  The Stark Law also prohibits the submission of claims for designated health services resulting from a prohibited referral.

Designated health services for purposes of the Stark Law include:

–        Clinical laboratory services

–        Physical therapy services

–        Occupational therapy services

–        Outpatient speech-language pathology services

–        Radiology and certain other imaging services

–        Radiation therapy services and supplies

–        DME and supplies

–        Parenteral and enteral nutrients, equipment and supplies

–        Prosthetics, orthotics and prosthetic devices and supplies

–        Home health services

–        Outpatient prescription drugs

–        Inpatient and outpatient hospital services

This settlement highlights the importance of heeding legal advice related to anti-kickback and Stark risk areas and is also an important reminder of the large monetary incentives that encourage whistleblowers to expose Stark Law and Anti-kickback violations.

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