Two Southwest Missouri health care providers have agreed to pay the United States $34,000,000 to settle allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department receently announced. The two Defendants are Mercy Hospital Springfield f/k/a St. John’s Regional Health Center, and its affiliate, Mercy Clinic Springfield Communities f/k/a St. John’s Clinic. Among other health care facilities, the Defendants operate a hospital, clinic, and infusion center in Springfield, Missouri.

The settlement resolved allegations that the Defendants submitted false claims to the Medicare Program for chemotherapy services rendered to patients referred by oncologists whose compensation was based in part on a formula that improperly took into account the value of their referrals of patients to the infusion center operated by the Defendants. Federal law restricts the financial relationships that hospitals and clinics may have with doctors who refer patients to them.

“When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

The allegations settled arose from a lawsuit filed by a whistleblower, Dr. Viran Roger Holden, a physician who was employed by one of the Defendants, under the qui tam provisions of the False Claims Act. Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. Dr. Holden will receive $5,440,000 from the recovery.

“This settlement protects patients and the public by enforcing the federal protections against profit incentives for physicians,” said Acting U.S. Attorney Thomas M. Larson for the Western District of Missouri. “Patients deserve assurances that they are receiving appropriate medical care, unbiased by hidden incentives. And taxpayers deserve assurances that the cost of public health care programs is not inflated by unnecessary procedures and services.”

“When physician compensation improperly accounts for referrals, patients are left to wonder whether their doctor’s judgment has been tainted and motivated by financial interests,” said Special Agent in Charge Steven Hanson for the Department of Health and Human Services Office of the Inspector General. “Illegal financial reward has no place in health care. Today’s settlement should send a message that, together with our law enforcement partners, we will pursue these cases.”

The government’s intervention/complaint in this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

The case, United States ex rel. Holden v. Mercy Hospital Springfield, et al., Case No. 15-cv-3283 (W.D. Mo.), was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Missouri, and the U.S. Department of Health and Human Services’ Office of Inspector General. The claims settled by this agreement are allegations only, and there has been no determination of liability.