Cleveland Clinic Unit Pays $21.25 Million to Resolve Kickback Case

July 12, 2021

United States Department of Justice recently announced that Akron General Health System, which was acquired by the Cleveland Clinic Foundation at the end of 2015, will pay $21.25 million to resolve violations of the federal Anti-Kickback Statute brought to issue pursuant to a False Claims Act lawsuit.

The payment, by now owner Cleveland Clinic, resolves allegations that between August 2010 and March 2016, the hospital system paid compensation substantially in excess of fair market value to physicians in order to secure patient referrals.

As always in these types of cases, which are civil actions, the settlement does not involve any admission that the allegations were true.

Here are two takeaways for you:

1. If a hospital violates the law by overpaying physicians for their services, the physicians were overpaid as a result of accepting the extra compensation. Depending on the regulatory scheme, that leaves open the question as to whether the physicians receiving the payments also violated the law. For example, anti-kickback law turns on intent, which can be inferred, but prohibitions against self-referral, such as the federal Stark Law, are strict liability statutes – no intent required.

2. As indicated, the Cleveland Clinic settlement on behalf of its Akron General Health System resulted from a whistleblower action under the federal False Claims Act. Interestingly, the whistleblower was Akron General Health System’s former Director of Internal Audit, Beverly Brouse. She raised issues concerning the arrangements that the system had with certain physician groups and was subsequently terminated. Whether or not those concerns were correct or not and whether or not her termination related to her concerns have now been settled.

As I’ve written before, physicians and their medical groups need to be extremely careful not to create whistleblowers within your ranks. Take compliance concerns to heart and investigate them as part of your internal compliance program. And whatever you do, don’t retaliate against someone for raising compliance concerns; it only adds fuel to the fire and you’re the one who’s likely to get burned.

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