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Medical care kickbacks are illegal, but some hospitals are trying to make
an end-run around the law by coming up with creative and sneaky ways to
cut doctors and nursing homes in for a piece of the action.

Creative and sneaky, yes — but not creative and sneaky enough. In
2014, nearly two-thirds of False Claims Act case settlements and verdicts
related to healthcare fraud against the Government. Within that group,
one kind of medical fraud dominated the rest: violations of the Anti-Kickback
statute. Hospitals, therapy groups, durable medical providers, and others
have been caught green-handed trying to pay for more business.

The Anti-Kickback Statute

The Anti-Kickback Statute (AKS) says that hospitals, hospices, nursing
homes, etc., can’t pay people to send them business. Congress was
concerned that healthcare providers such as doctors, therapists, and nursing
homes were getting paid to refer their patients for medical treatments.
The practice set up all the wrong incentives. If doctors send patients
for treatments they didn’t really need, then Medicare and Medicaid
get stuck with the bill for unnecessary medical care. If, for example,
a nursing home refers patients for occupational therapy because the nursing
home gets a kickback and not because the residents really need the O.T.,
then we taxpayers wind up paying for care that nobody needed or wanted
just because it is financially beneficial for the nursing home. Ultimately
the practice destroys the patient-doctor relationship by sowing seeds
of distrust. After all, how can you trust your doctor or your nursing
home if you don’t know whether they are giving you advice based
on what is best for you — or for their own bank accounts?

Here in my whistleblower blog, I’ve been cataloguing the False Claims
Act cases that settled or resulted in a verdict during the Government’s
fiscal year 2014. I’m in a series on AKS violations.

St. James Healthcare and Sisters of Charity of Leavenworth Health System – $3.85 million

In December 2013 (which, remember, is part of the Government’s 2014
fiscal year), a Butte, Montana, hospital and its Colorado-based parent
company agreed they would settle False Claims Act allegations for $3.85
million. This case featured a refreshing twist — St. James and Sisters
of Charity revealed their own improper conduct to the Government. The
hospital disclosed that it had violated several acts, including the Anti-Kickback
statute. DOJ said, somewhat vaguely, that the hospital had acknowledged
providing “various improper financial incentives to physicians and
physician groups that were involved in a joint venture with St. James
to own and operate a medical office building on the St. James campus.”

Meridian Surgical Partners, L.L.C. – $5.12 million

A group that operates surgical centers paid the Government $5.12 million
to end a qui tam lawsuit filed by whistleblower Thomas Simmons. Simmons
had been the manager of an ambulatory surgery center that was managed
by and principally owned by Meridian Surgical Partners of Brentwood, Tennessee.
The whistleblower began the case in 2011, and the case settled shortly
before trial was scheduled to take place in September 2014. Simmons said
that Meridian was using ownership shares to persuade physicians to refer
business. First, he said, Meridian paid an inflated amount to buy out
the doctors’ interest in the ambulatory surgical center so that
Meridian would have a majority interest; then, it rewarded the doctors
when they did refer patients by giving the doctors minority ownership
shares in the surgical center. The Government never intervened, so under
the False Claims Act, the whistleblower was entitled to receive between
25% and 30% of the settlement.