DOJ announces $30 million settlement with Detroit Medical Center for self-disclosed violations

by Ben Vernia | December 30th, 2010

On December 30, the Department of Justice announced a settlement with the Detroit Medical Center. The Michigan hospital has agreed to pay $30 million, according to DOJ’s press release, for violations which it self-disclosed in the process of selling its facilities to a Nashville-based health care company:

Detroit Medical Center, a non-profit company that owns and operates hospitals and outpatient facilities in Detroit, has agreed to pay the United States $30 million to settle allegations that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute, by engaging in improper financial relationships with referring physicians, the Justice Department announced today.

The Stark Statute and the Anti-Kickback Statute restrict the financial relationships that hospitals may have with doctors who refer patients to them. Most of the relationships at issue in this matter involved office lease agreements and independent contractor relationships that were either inconsistent with fair market value or not memorialized in writing.

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The government learned of the statutory violations from Detroit Medical Center, itself, which discovered improper financial relationships with a number of physicians as it prepared for the sale to Vanguard. “We applaud the hospital leadership’s decision to come forward voluntarily to disclose these issues to the government,” said U.S. Attorney Barbara McQuade.

Detroit Medical Center is in the process of selling its facilities to Vanguard Health Systems Inc., a company headquartered in Nashville, Tenn., that owns and operates healthcare facilities in five states. Vanguard also signed today’s settlement.

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