Corporate Compliance

Texas Hospital group pays U.S. $27.5 million in false claims settlement

Compliance Monitor, November 4, 2009

A Texas hospital group will pay the United States $27.5 million to resolve allegations that it violated the False Claims Act, the Anti-Kickback Statute, and the Physician Self-Referral Law (Stark Law) between 1999 and 2006, according to a Department of Justice (DOJ) press release.
McAllen Hospitals L.P., doing business as South Texas Health System, subsidiary of Universal Health Services Inc., violated all three regulations by paying illegal compensation to physicians in order to persuade them to refer patients within the hospital group.
Under the Stark Law, Medicare providers are prohibited from billing Medicare for referrals from doctors with whom the providers have a financial relationship. The hospital group distributed payments to the physicians through a series of sham contracts, including medical directorships and lease agreements.
The federal government will receive approximately $25.2 million of the settlement and the Texas Medicaid program will receive $2.3 million for the false claims submitted to the program. Bruce Moilan, a former employee of the defendants, raised the case using the False Claims Act’s qui tam provision. Moilan will receive a $5.5 million share of the settlement.

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