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Hospital pays $50M to settle FCA allegations

The United States Department of Justice recently announced that a hospital out of Virginia has agreed to pay $50 to settle claims that it violated the False Claims Act (FCA). This most recent settlement highlights the government's continued focus on aggressively pursuing potential health care fraud cases. The settlement was the result of a Qui Tam case originally brought by a former hospital executive. After the hospital executive initiated this lawsuit, the government chose to step in and move the case forward.

Details of the case

In this case, the federal agency accused the hospital of paying physicians based on "volume or value of referrals" in violation of the Anti-Kickback Statute (AKS) and Stark Laws. The DOJ states the hospital administration allowed these alleged violations to occur for over a decade. Investigators with the DOJ state they have evidence to support the allegations, including evidence the hospital paid physicians at a rate of compensation well above fair market value.

The settlement provides an opportunity to highlight the interplay between these laws. Lawmakers passed the AKS and Stark Laws to reduce the risk physicians would be motivated by financial gain instead of the needs of the patient. The FCA provides the government with a fierce legal tool to hold medical institutions accountable for fraudulent billing. As a result, if the government can establish the billing practices were the result of an AKS or Stark Law violation, they can also file an FCA claim.

Explanation of reason for settlement 

Hospital officials have stated that the settlement was in the best interest of the hospital and patients. They stated the hospital would have accrued enormous expense had it continued to defend itself against these allegations.

One of the lures of Qui Tam cases is the potential for a whistleblower to gain a portion of any reward that results from the case. In this instance, the whistleblower who brought the lawsuit forward stands to gain approximately $10 million from the settlement.

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