The Business of Healthcare

Uncompensated Medical Directorship Leads to $3.2 Million False Claims Act Settlement

You may have seen their websites: Anesthesia “practice management companies” that advertise “no stipends!” to obtain facility contracts.

Or, you may have seen the RPFs, usually drafted by “consultants” or “management companies”  (and others specializing in perhaps unknowingly committing federal crimes) who promise the surgeon-owners of ASCs that they’ll get anesthesia groups to provide a plethora of coverage and directorship services for free.

Oops. Nothing just became $3.2 million. Plus legal fees. Plus the continued risk of being criminally prosecuted.

Yes, the type of stupid compliance mistake underlying these idiots’ thinking just led to a $3.2 million civil settlement of a False Claims Act (i.e., whistleblower) suit brought against (among others) an orthopedic surgery practice, Georgia Bone & Joint (“GBJ”) and its related surgery center, Southern Bone & Joint a/k/a Summit Orthopaedic Surgery Center (“Summit Surgery Center”), as well as against CRNA David LaGuardia (“LaGuardia”) and anesthesia entities Southern Crescent Anesthesiology, PC (“SCA”) and Sentry Anesthesia Management, LLC (“Sentry”).

The suit was initially brought by Sharon Kopko, the former practice/facility administrator for both GBJ and Summit Surgery Center.  Upon investigation by the U.S. Department of Health & Human Services Office of Inspector General, the FBI, and the U.S. Postal Service Office of Inspector General, the federal government took up the prosecution of the case.

From the settlement announcement of the U.S. Attorney for the Northern District of Georgia, the allegations against the defendants apparently grew from those originally contained in Ms. Kopko’s complaint to include  that LaGuardia, Sentry, and SCA provided a free medical director to Summit Surgery Center  in order to induce it to choose to perform more procedures at the surgery center rather than in the GBJ office.

In the words of the U.S. Attorney, “Kickbacks should never play a role in medical decision-making. It is critical to our health care system that patients seeking health care know that their providers’ recommendations are based on what is in the patient’s best interests and not influenced by illegal kickbacks or arrangements.”

Stay tuned. It’s yet to be seen who’ll now be criminally prosecuted.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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Managing Risk

False Claims Act Settlement – Another Lesson For Physicians

Please! The next time a hospital tells you that they’ve checked the deal with their lawyers and that it’s okay, don’t take their word for it. They won’t pay your fine and they won’t do your time.

Yes, it’s another week, another settlement by a hospital with the federal government over False Claims Act violations.

Underlying the $3.2-plus million settlement by Tri-City Medical Center of Oceanside, California, which admitted no wrongdoing, were allegations of Stark Law violations.

The Stark Law makes it illegal for a hospital to bill Medicare for certain services referred by physicians with whom the hospital has a financial relationship unless the arrangement falls within one of the law’s specific exceptions. Among other requirements, the exceptions require that financial arrangements not take into account the volume or value of referrals, that they not exceed fair market value, that they they are commercially reasonable, and that they are set out in writing.

The government alleged that Tri-City committed 97 Stark Law violations. Those included five financial arrangements which appeared not to be commercially reasonable or for fair market value with the physician who was once the chief of its medical staff, and 92 with other physicians and groups which did not satisfy an exception to the Stark Law, including those with expired written agreements, agreements missing signatures, or lost agreements.

The flip side of every allegation that a hospital billed for a physician financial arrangement that violates Stark is an allegation against the physician for his or her liability under the statute which include significant fines and exclusion from participation in Federal health care programs.

The take-aways for physicians:

1. Don’t rely on a hospital’s assurance that a financial arrangement satisfies Stark (or any other fraud and abuse law).

2. Get qualified, independent counsel to advise you.

3. Make certain that the underlying agreements are in writing and fully signed.

4. Keep a copy of the agreement in a safe place as if it were a promissory note payable to you for the value of the ability to treat Medicare, Medicaid and other federal health care program patients for the rest of your career – because it is.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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Employment | Employment-Hospital

Hospital Merged: Is Your Contract Purged?

I watched a clip from one of those shark shows. A shark was eating a shark.

That reminded me that hospital mergers are on the rise.

What will happen to your hospital contract or to your hospital employment relationship in the event the hospital merges? Will you still be the contract holder? Will you still have a job?

To the general public, the merger of two business entities appears to be the creation of a partnership of sorts. The reality is much different. One entity disappears into the other. Just like in the case of those sharks.

OK, you got me! Sure, we might be able to see the old hospital building standing there. It might remain open. (Or, it might be knocked down and turned into condos or maybe a Wal-Mart) But if it’s open, it’s now owned and controlled by the surviving merger “partner.” Setting aside the legal niceties, “we’ve merged with you” is simply the more polite way of saying “you’ve been acquired.”

So, what can you do in advance to reduce a degree of merger risk? Consider one or more of the following contracting deal points:

  1. Your contract will continue uninterrupted in the event of a merger.
  2. You will receive $X in the event your contract is interrupted due to merger.
  3. You have the right to terminate your contract in the event of a merger.
  4. The hospital will take all reasonable steps to assure that your group is the one providing X service at that location following a merger.

The complete list is longer and, depending on your circumstances, customizable.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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