The North Broward Hospital District (Broward Health) will pay $69.5 million to the State of Florida to settle allegations that it violated the False Claims Act, the federal Anti-Kickback Statute and the Stark Law. The physician who originally filed suit alleging the violations of federal law will receive more than $12 million of the settlement for his actions as a whistleblower.

Broward Health was named in a whistleblower suit filed in 2010 by Dr. Michael Reilly, an orthopedic surgeon. Reilly alleged that nine cardiologists and orthopedic surgeons were overpaid by between $150,000 and $300,000 per year over the course of several years in a scheme that illegally compensated physicians for the volume or value of their referrals to Broward Health. According to the allegations in the suit, Broward Health utilized a “contribution margin report” to determine whether physicians were generating sufficient referrals to offset the salaries they were receiving from the hospital system. The Justice Department joined the suit in 2011 and ultimately found the overpayments to be so extreme that they caused the hospital net operating losses – more than $20 million in 2011 alone.

Broward Health did not admit any improper conduct as part of the settlement, but in a statement from the U.S. Department of Justice, U.S. Attorney Wilfredo A. Ferrer remarked that, “Our citizens deserve medical treatment uncorrupted by excessive salaries paid to physicians as a reward for the referral of business rather than the provision of the highest quality healthcare.”

The settlement in the Broward Health case represents just a small part of the over $25 billion collected by the U.S. Department of Justice (DOJ) through False Claims Act cases since 2009. The DOJ continues to take very seriously acts of fraud against federal healthcare programs and aggressively pursues allegations of wrongdoing nationwide.

The government’s aggressive stance on healthcare fraud highlights the need for proper waste, fraud, and abuse compliance. Monetary penalties such as that agreed to in the Broward Health case should compel all healthcare providers to closely examine existing physician compensation programs for compliance with federal law and address any areas of weakness or vulnerability. The white-collar litigation and compliance attorneys at FisherBroyles are available to assist you with any questions regarding the establishment, implementation and ongoing maintenance of a compliance program.