Detroit hospital, Tenet Healthcare settle kickback allegations for nearly $30 million

by Ben Vernia | June 2nd, 2023

On May 31, the Department of Justice announced that Detroit Medical Center, Tenet Healthcare Corp., and a related company agreed to pay nearly $30 million to settle allegations, originally brought by a whistleblower, that the hospital paid kickbacks to referring physicians. According to DOJ’s press release:

VHS of Michigan Inc., doing business as, The Detroit Medical Center Inc. (DMC), Vanguard Health Systems Inc. (Vanguard), and Tenet Healthcare Corporation (Tenet), has agreed to pay $29,744,065 to the government to resolve allegations that they violated the False Claims Act by providing kickbacks to certain referring physicians.

DMC operates hospitals in and around Detroit, including Sinai Grace Hospital and Harper University Hospital. In October 2013, Tenet acquired Vanguard owned-and-operated hospitals and outpatient facilities, including DMC.

The settlement announced today resolves the government’s allegations that DMC, Vanguard, and Tenet caused the submission of false or fraudulent claims to Medicare. Specifically, the government alleged that from Jan. 1, 2014, through Dec. 31, 2017, Sinai Grace Hospital and Harper University Hospital provided the services of DMC-employed mid-level practitioners to 13 physicians at no cost or below fair market value in violation of the Anti-Kickback Statute (AKS). The government further alleged that the physicians were selected because of their large number of patient referrals to Sinai Grace Hospital and Harper University Hospital and that the purpose of these arrangements was to induce the physicians to refer additional Medicare patients to DMC facilities.

The AKS prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare and other federally funded programs. The statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives and are instead based on the best interests of their patients.

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DOJ announced that the whistleblower, a doctor formerly employed at the Wayne State University Medical School, will receive $5,205,211.37 (a 17.5% relator’s share). The government did not, however, state that the defendants will be under a Corporate Integrity Agreement as part of the settlement.

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