Detroit Medical Center (DMC) recently agreed to pay the federal government $30 million to settle allegations arising from the hospital's financial relationships with referring physicians. The dollar amount of the settlement illustrates the seriousness with which the government views the requirements for structuring physician/hospital financial relationships in compliance with the Stark and anti-kickback laws.
DMC was in the process of selling its ten hospitals and institutes to Vanguard Health Systems (Vanguard) and the settlement resulted from DMC's self-disclosure of the financial relationships during pre-sale due diligence. The self-disclosed relationships included the rental of office space to, and personal services arrangements with, physicians without written and executed leases and agreements in place for the entire term, and at rates that may not have been consistent with fair market value. The settlement agreement identified 65 alleged improper lease arrangements and 50 personal services arrangements.
The settlement agreement also cites DMC's provision of business courtesies, such as tickets for sporting events, to referring physicians in excess of permissible limits and the provision of signage and advertising materials on terms not consistent with commercial reasonableness and fair market value. All physicians with alleged improper financial relationships with DMC were identified in the settlement agreement.
The government also alleged that DMC violated the False Claims Act (FCA) in submitting claims for evaluation and management services furnished by DMC-employed physicians, citing lack of available documentation to support the level of care billed.