Rush University Medical Center enters into False Claims Act settlement

April 16, 2010  |  Class Actions, Whistleblower/Qui Tam

Rush University Medical Center in Illinois has settled allegations made in a whistleblower lawsuit that the provider made real estate deals with physicians and medical groups in violation of the Stark Law.  The Stark law forbids Medicare payments to hospitals for inpatient and outpatient services and other services such as lab work and radiology when patients are referred for the services by doctors who have a financial relationship with the hospital.  Leases between hospitals and referring physicians violate the statute unless certain safeguards of fairness and neutrality are met, such as a written lease signed by the parties, commercially reasonable terms and fair-market value payments.  The purpose of the Stark law is to make sure that a doctor’s medical judgment is influenced solely by the patient’s best interests and not by improper financial motivations.  Medicare claims to the government are considered false under the federal False Claims Act if they seek reimbursement for services performed by a hospital for a physician whose relationship is not Stark-compliant.

The Rush University Medical Center case was filed by an orthopedic surgeon and the provider’s former director of real estate.  The suit alleged that from 2000 to 2007, the hospital participated in office-space leasing arrangements with three medical groups and two physicians that were not Stark-compliant.  The hospital allegedly made rent concessions and other office-space deals for obstetrician/gynecologists, an internal medicine group, a urology group and a neurosurgery group.  In some cases, there were no written, fully executed leases and the physician-tenants did not pay their rent in a timely and consistent fashion.  There was no evidence that the whistleblowers had negotiated the leasing arrangements at issue or that they were in any way responsible for ensuring compliance with the Stark Law’s real estate component.

Pursuant to the Qui Tam portion of the False Claims Act, the two whistleblowers will share in the government’s settlement.

For the full story, go to AIS Health.

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