The Anti-Kickback Statute made it illegal for hospitals to pay doctors
to send them patients. Instead of following the law, some hospitals have
worked out elaborate schemes to try to disguise the kickbacks they seem
hell-bent on handing out to physicians.
Thanks to whistleblowers, Government enforcement efforts, and occasionally
the hospitals themselves, the Government is trying to root out the practice
of kickbacks that is tainting the medical industry. In fiscal year 2014,
the Government collected close to $200 million from healthcare organizations
accused of violating the AKS.
No matter how much they get disguised, kickbacks to doctors are wrong
and they undermine Americans’ trust in healthcare providers. Hospitals
are figuring out clever ways to disguise kickbacks, and whistleblowers
and the federal government are struggling to keep up.
I am a lawyer, and I represent courageous whistleblowers trying to stop
fraud against Medicare and Medicaid. I’ve been blogging about lawsuits
under the False Claims Act that accuse hospitals, nursing homes and home
health agencies of violating the Anti-Kickback Statute by paying doctors
to refer patients to their facilities.
Memorial Hospital – $8.5 million
In March, the Department of Justice announced that Memorial Hospital of
Fremont, Ohio, would pay $8.5 million to end a False Claims Act suit against
the hospital. The Government said that Memorial Hospital had worked out
two deals with doctors that violated the Anti-Kickback Statute. In one,
the hospital arranged to pay an ophthalmologist inflated rates for intraocular
lenses; the eye doctor bought the lenses at one rate, and then sold them
to Memorial at a higher one. The hospital also was accused of setting
up a cozy joint venture with a pain management physician. Since the fraud
affected Medicaid patients as well as Medicare patients, the State of
Ohio received $600,383 of the settlement.
Ashland Hospital Corp. d/b/a King’s Daughters Medical Center – $40.9 million
The federal government accused Ashland Hospital Corp. d/b/a King’s
Daughters Medical Center of a variety of frauds, ranging from unnecessary
coronary stents to paying kickbacks to physicians. According to the allegations,
King’s Daughters paid certain, specific cardiologists excessively
high salaries that exceeded the fair market value. These cardiologists
funnelled patients the hospital’s way, and furthermore created false
records to justify letting the hospital perform expensive procedures that
in fact were unnecessary. King’s Daughters denied all of the charges,
but nonetheless forked over $40.9 million to settle the claims against
it. The State of Kentucky received over $1 million of the payment from
These two schemes share a common theme; according to the allegations, in
each situation the hospital wanted a way to get kickbacks to the doctors,
and it found a way to manipulate money it was otherwise paying the physicians.
By artificially inflating the amount of money it pays a doctor for certain
services – be they medical products, drugs or salaries – a
hospital can slip money into a physician’s pocket without triggering
the automatic alarms for kickbacks.
Thanks to the False Claims Act, and with the help of whistleblowers willing
to come forward with information about the fraud, the Government can recover
money from home health agencies, hospitals, nursing homes and skilled
living facilities that are using kickbacks to reward physicians for sending business.