California doctors pay $1 million to resolve Stark Law allegations

by Ben Vernia | January 29th, 2018

On January 23, the Department of Justice announced that two California urologists agreed to pay $1 million to settle allegations that the pair violated the self-referral (Stark) law’s prohibitions. According to DOJ’s press release:

Drs. Aytac Apaydin and Stephen Worsham, urologists based in Northern California, will pay $1.085 million to resolve allegations that they submitted and caused the submission of false claims to Medicare for image guided radiation therapy (IGRT) that was referred and billed in violation of the physician self-referral law (commonly known as the “Stark Law”) and the Anti-Kickback Statute, the Department of Justice announced.  Drs. Apaydin and Worsham own and operate Salinas Valley Urology Associates (SVUA) in Salinas, California.  They also owned Advance Radiation Oncology Center (AROC), located in Salinas, California, which dissolved in 2016.  IGRT is used to treat patients who are diagnosed with cancer, including prostate cancer patients.

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The Anti-Kickback Statute and the Stark Law are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives.  The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare.  The Stark Law forbids health care providers from billing Medicare for certain services referred by physicians who have a financial relationship with the entity performing the service, unless an exception applies.

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The United States alleged that Drs. Apaydin and Worsham knowingly caused eight urologists in Monterey and Salinas, California (the “Lessee Urologists”) to violate the Anti-Kickback Statute and the Stark Law.  Drs. Apaydin and Worsham allegedly solicited the Lessee Urologists to enter into lease agreements with AROC under which the Lessee Urologists could bill for, and thereby profit from, their referrals of IGRT performed at AROC.  The United States also alleged that Drs. Apaydin and Worsham violated the Stark Law by improperly billing Medicare for their own IGRT referrals to AROC, despite the fact that AROC and SVUA were separate entities and their financial arrangements did not comply with any exceptions to the Stark Law.

The Lessee Urologists previously entered into settlement agreements pertaining to their IGRT claims, under which they collectively agreed to pay the United States $900,000.

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