by Ben Vernia | February 18th, 2019
On January 28 (at the end of a lengthy government shutdown), the Department of Justice announced that on December 28, 2018, Los Angeles-based Avanti hospitals and the chain’s owners had agreed to pay $8.1 million to settle civil allegations, originally brought by a whistleblower, that the company’s hospitals made illegal payments for referrals. According to DOJ’s press release:
The Department of Justice announced that on Dec. 28, 2018 Los Angeles-based Avanti Hospitals LLC (Avanti) and six of its owners will pay the federal government $8.1 million to settle claims that they violated the False Claims Act by submitting, or causing Avanti’s subsidiary, Memorial Hospital of Gardena (Gardena Hospital), to submit false claims to the Medicare and Medicaid programs for medical services referred by a physician who received kickbacks and other improper payments from Gardena and other Avanti affiliates.
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The government alleged that the payments from Avanti, Gardena Hospital and at least two other Avanti affiliates to a high-referring physician violated the Anti-Kickback Statute and the Physician Self-Referral Law, commonly known as the Stark Law. The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs. The Stark Law prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper compensation arrangement. Both the Anti-Kickback Statute and the Stark Law are intended to ensure that a physician’s medical judgment is not distorted by improper financial incentives and is instead based only on the best interests of the patient.
The settlement announced resolved allegations that Avanti, Gardena Hospital and at least two other Avanti affiliates provided compensation to a physician they engaged as a medical director that (1) exceeded fair market value for his services, and (2) was an attempt to incentivize him to refer patients to Gardena Hospital.
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The government also announced that the hospitals had agreed to a Corporate Integrity Agreement with the Department of Health and Human Services, and that the whistleblower (a physician who was the former director of one of the company’s hospitals) would receive $1.6 million (a 19.75% relator’s share).
