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Texas hospital’s $21M settlement shows government’s commitment to anti-kickback enforcement

Citizens Medical Center’s $21.75 million settlement with the government this week provides further evidence that the government’s stepped-up enforcement of the Stark Law and Anti-Kickback Statute is producing results with the help of whistleblowers.

Three physicians alleged in a “qui tam” lawsuit that Citizens, a hospital in Victoria, Texas, paid doctors in a variety of specialties to send their patients to Citizens’ facilities for care. For example, they alleged that Citizens induced its emergency room physicians to send patients needing cardiac care to Citizen’s “Chest Pain Center” by paying these ER physicians bonuses based on the revenue of the Chest Pain Center.

Similarly, the whistleblowers alleged that Citizens improperly incentivized its cardiologists to send their patients to Citizen’s facilities, particularly the medical center’s exclusive cardiac surgeon, by providing them with financial benefits such as above fair-market-value compensation and below-market rental space.

The Anti-Kickback Statute and Stark Law make it illegal for a medical provider, such as a hospital, to pay physicians in order to obtain referrals of their business. When a medical provider knowingly submits bills to Medicare and Medicaid for services obtained in violation of these laws, the provider is liable for fraud against the federal government under the federal False Claims Act. The whistleblowers in this case will receive a total of $5.9 million as a reward under the qui tam provisions of the False Claims Act.

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