A South Carolina-based healthcare system agreed to pay $36.5 million as part of a settlement with the Department of Justice (DOJ) addressing alleged violations of the False Claims Act (FCA), Stark Law, and Anti-Kickback Statute.
St. Francis Physician Services, St. Francis Hospital, and Bon Secours St. Francis Health System agreed to resolve allegations they paid orthopedic surgeons based on the volume or value of referrals, leading to false claims submitted to Medicare and TRICARE, the DOJ said in a press release Thursday.
The settlement resolves a lawsuit initially brought by Daniel Lee, chief of orthopedics at St. Francis from 2007-08, under the FCA’s qui tam provisions. According to the complaint, filed in U.S. District Court for the District of South Carolina, Lee blew the whistle on St. Francis after documenting Stark Law violations, including “payments to employed orthopedic surgeons based in part on the value of their referrals to the hospital system.”
Lee will receive approximately $10.2 million as part of the settlement amount, according to the DOJ.
The details: In 2006, Piedmont Orthopedic Associates (POA), a potential competitor to St. Francis, was in the process of obtaining a certificate to operate an outpatient surgery center in the Greenville, S.C., region, per the complaint.
St. Francis had just completed an ambulatory surgery center at its main campus that was underutilized and “did not want competition for patients from POA,” according to the complaint.
“Consequently, [St. Francis] developed a strategy to lure the POA surgeons into becoming employees of the hospital system by paying them excessive compensation, including an annual bonus pool,” the complaint stated.
The criteria for the bonuses incentivized and rewarded the physicians for “generating referrals to the hospital system for physical therapy, laboratory, radiology, and other ancillary services,” the complaint stated.
Company response: “While we dispute the claims made in this litigation and know that the physician employment arrangements outlined in the case have not been in place for five years, reaching a settlement enables us to place our focus where it belongs—continuing to compassionately serve patients and communities by providing the high-quality, mission-centric care that our community has come to expect without the disruption this kind of litigation can pose,” a St. Francis spokesperson said in an emailed statement.
St. Francis agreed to the settlement without admitting or denying liability.