On October 26, South Texas Health System settled a False Claims Act lawsuit and a four year federal investigation involving allegations that the health care provider engaged in Medicare and Medicaid fraud by providing Rio Grande doctors with phony job titles, lease arrangements and other improper kickbacks in exchange for the physicians’ referral of patients to South Texas Health System hospitals.
Federal law prohibits a provider such as South Texas from billing the government for patients referred by doctors with whom the facility has a “financial relationship,” unless specific exemptions apply.

The alleged fraud was uncovered in 2005 when a whistleblower filed a False Claims Act suit, which described the provider’s kickback scheme with seven local physicians, including Eugenio Galindo, a McAllen doctor, Subbarao Yarra, Jose Igoa, Carlos Mego, Harish Koolwal, E. Linda Villarreal and Luis Arango, a doctor in Mission, Texas who reached his own settlement with the government in 2003. The whistleblower in the case was a former systems director of materials management, Bruce Moilan Sr.

Moilan charged that Galindo, an oncologist, was allegedly awarded improper fees for medical directorships that were used to pay off loans and advances of over $500,000 from South Texas. In addition, the provider allegedly leased an office space owned by Galindo. Drs. Yarra, and Mego ran a cardiology practice in McAllen that allegedly was given a $150,000 loan from South Texas, which loan was later written off. South Texas was said to have paid the rent and provided furniture and supplies for the medical offices of Dr. Igoa, a McAllen psychiatrist. Moilan’s complaint alleged that Dr. Villarreal, an Edinburg specialist in internal medicine, received a medical directorship from South Texas, along with certain services for properties she owned, such as landscaping, air conditioning, painting, carpeting and furniture. And Dr. Koolwal, a McAllen specialist in cardiovascular diseases, was allegedly given office space and a medical directorship.

The False Claims Act allows private citizens to sue on the government’s behalf and share in any settlement. As part of the government’s settlement with South Texas, Moilan will receive a huge monetary award.

For the full story, go to The Brownsville Herald.