Corporate Compliance

IA medical center settles false claims case for $4.5 million

Compliance Monitor, September 2, 2009

Covenant Medical Center in Waterloo, IA, agreed to pay $4.5 million to settle claims that it had improper financial relationships with five physicians, according to a Department of Justice (DOJ) release.
Covenant allegedly violated the Stark Law by paying the physicians unreasonable compensation above fair market value. The Stark Law only allows hospitals to accept referrals from hospital-paid physicians if the compensation is set at fair market value. The Covenant physicians were the highest paid hospital-employed doctors in the entire country.
"This payment is the largest ever related to claims of healthcare fraud in the Northern District of Iowa," U.S. Attorney Matt M. Dummermuth of the Northern District of Iowa said in the release. "We are actively working with our investigative partners to ensure Medicare funds are properly spent, and we will continue to aggressively pursue all types of fraud in order to protect federal healthcare dollars."

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