Whistleblower Alleges Hospitals Engaged in Improper Financial Relationships with Referring Physicians
Two hospitals in Southwest Missouri have reached a $34 million settlement with the federal government to settle allegations that they violated the False Claims Act. The United States alleged that Mercy Hospital Springfield f/k/a St. John’s Regional Health Center, and its affiliate, Mercy Clinic Springfield Communities f/k/a St. John’s Clinic violated the False Claims Act by engaging in improper financial relationships with referring physicians. The government learned of the alleged issue through a whistleblower lawsuit.
The whistleblower attorneys at Parker Waichman LLP keep up-to-date with whistleblower lawsuits and settlements. The firm continues to offer free legal consultations to individuals with questions about filing a whistleblower lawsuit.
According to a May 18, 2017 press release issued by the Department of Justice, the health care providers allegedly compensated oncologists partly based on referrals. As a result, the government alleged, the defendants caused false claims to be submitted to the Medicare Program for chemotherapy services.
In the press release, officials emphasized that medical decisions should not be influenced by financial incentives.
“When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division, according to the release. “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”
“When physician compensation improperly accounts for referrals, patients are left to wonder whether their doctor’s judgment has been tainted and motivated by financial interests,” said Special Agent in Charge Steven Hanson for the Department of Health and Human Services Office of the Inspector General, according to the release. “Illegal financial reward has no place in health care. Today’s settlement should send a message that, together with our law enforcement partners, we will pursue these cases.”
The allegations became known through a whistleblower claim filed by a physician who was employed by the defendants. The plaintiff brought the lawsuit under the qui tam provisions of the False Claims Act, which allows private individuals to sue on behalf of the government when they have knowledge of fraud and false claims. Whistleblowers are also entitled to a portion of the recovery. In this case, the plaintiff will receive $5.4 million for bringing the case, the release states.
“This settlement protects patients and the public by enforcing the federal protections against profit incentives for physicians,” said Acting U.S. Attorney Thomas M. Larson for the Western District of Missouri, according to the release. “Patients deserve assurances that they are receiving appropriate medical care, unbiased by hidden incentives. And taxpayers deserve assurances that the cost of public health care programs is not inflated by unnecessary procedures and services.”
The DOJ notes that whistleblowers can play a crucial role in identifying health care fraud.
Parker Waichman notes that another whistleblower lawsuit resulted in a settlement in January 2017. Baxter Healthcare agreed to pay $18 million to settle allegations that it violated the False Claims Act as well as the Federal Food, Drug and Cosmetic Act (FDCA). The government alleges that Baxter repeatedly ignored reports of moldy air filters at its facility in Marion, North Carolina.
The whistleblower reported the issue to superiors multiple times, the suit states, but to no avail. The air filters were in a facility that produces sterile products such as IV therapies, premixed drugs and renal therapies. According to a DOJ press release, the whistleblower will receive $430,000 for bringing the case.
“Despite notification by an employee of potential contamination concerns, Baxter was poorly focused on instituting sufficient safety standards for their products,” said Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina, according to the press release. “Today’s resolution reflects (the court’s) commitment to hold accountable drug companies that violate manufacturing standards and wrongly profit from those violations.”
Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, commented on the settlement, stating “Following current good manufacturing practices is essential to ensure the safety and efficacy of our drugs,” according to the release. “Today’s settlement shows that the government will continue to hold companies accountable for failing to fulfill this critically important responsibility.”
What is a Qui Tam Lawsuit?
A whistleblower or “qui tam” lawsuit can be filed when private individuals have knowledge of fraud against the government, such as Medicare or Medicaid fraud. These qui tam cases are filed under the False Claims Act.
When a whistleblower has knowledge of fraud and chooses to pursue a case, the lawsuit is kept “under seal” so the government can investigate the matter confidentially. After reviewing the case, the government decides whether it wants to intervene and join the lawsuit. The individual can choose to pursue the case privately if the government does not intervene. However, the chances of success are greater when the government joins a whistleblower lawsuit.
If the case is successful and leads to recovery, the whistleblower is entitled to a portion of the recovery. Individuals who file a lawsuit under the qui tam provisions of the False Claims Act can receive between 15 and 30 percent of damages recovered.
The law also offers protections for individuals filing a whistleblower lawsuit, since these actions almost always come with professional risk. For example, it is illegal to demote, fire, harass or otherwise retaliate against employees for their whistleblower activities.
Filing a Whistleblower (Qui Tam) Lawsuit
Whistleblowers play a crucial role in identifying corporate healthcare fraud and other actions that cause false claims to be submitted to federal programs such as Medicare and Medicaid. Whistleblowers are protected from retaliation, and can recover compensation for their efforts. If you or someone you know is interested in filing a whistleblower lawsuit, contact Parker Waichman today. Our experienced attorneys offer free, no-obligation case evaluations. For more information, fill out our online form or call 1-800-YOURLAWYER (1-800-968-7529).