Hospital Corporation of America (HCA) Inc., the parent company of Parkridge Medical Center in Chattanooga, Tenn., and Nashville, Tenn.-based HCA Physician Services, has agreed to pay the U.S. Department of Justice $16.5 million to settle claims that it violated the False Claims Act and the Stark Statute in 2007.
HCA Holdings Inc agreed to settle charges that it provided financial benefits to a Chattanooga, Tenn., diagnostics business in exchange for referrals to the hospital operator’s facilities in the area.
During 2007, HCA’s Parkridge Medical Center and HCA Physician Services subsidiaries allegedly provided such benefits to a physician group, Diagnostic Associates of Chattanooga.
According to the DOJ, the financial transactions included rental payments for office space leased from Diagnostic at a rate in excess of fair market value in order to assist Diagnostic members to meet their mortgage obligations and a release of Diagnostic members from a separate lease obligation.
The Stark Statute restricts financial relationships that hospitals may enter into with physicians who potentially may refer patients to them. Federal law prohibits the payment of medical claims that result from such prohibited relationships.
“Improper business deals between hospitals and physicians jeopardize both patient care and federal program dollars,” Daniel R. Levinson, the U.S. Department of Health and Human Services’ Inspector General, said in a press release. “Our investigators continue to work shoulder to shoulder with other law enforcement authorities to stop schemes that imperil scarce healthcare resources.”
The civil settlement also resolves a pending lawsuit filed under the qui tam, or whistleblower, provisions of the U.S. False Claims Act, which prohibits people or businesses from defrauding the government and provides incentives for those who suspect wrongdoing to come forward.
HCA agreed to make the payment to the federal government and the state of Tennessee, with the federal portion representing $15.7 million of the total. The whistleblower will receive an 18.5% share ($3.1 million). HCA is also required to pay $236,000 to cover the whistleblower’s legal fees.
As part of the settlement, Parkridge Medical Center also has agreed to a five-year corporate integrity agreement with the U.S. Department of Health and Human Services’ Inspector General to ensure its continued compliance with federal healthcare benefit program requirements. However, Parkkridge admitted no intentional wrongdoing in any part of the settlement.
Among other things, the settlement also requires Parkridge to hire an independent review organization to review certain business arrangements and transactions.
The settlement is part of a broader crackdown on health care fraud that began in May 2009.