On January 4, 2010, the U.S. Attorney’s Office for the Northern District of Texas announced a settlement with Arlington Memorial Hospital in Arlington, Texas. The settlement resolved allegations self-disclosed by the hospital that its longstanding contract with a physician group violated the Stark Law and the Anti-Kickback Statute. According to the DOJ press release, http://www.justice.gov/usao/txn/PressRel10/arlington_memorial_hospital_settle_pr.html, the hospital paid the physician group for interpreting arterial blood gas test results even though such tests no longer required any professional interpretation. According to DOJ, rather than reduce the compensation or revise the terms of the contract, the hospital’s former president agreed that the payments would instead be for uncompensated charity care and oversight of the hospital’s blood gas lab, despite the fact that the contract indicated payments were for interpretation of the blood gas tests. The government alleged that Medicare ultimately paid the hospital for pulmonology-related items and services referred by the group’s physicians. According to the government, the hospital “knowingly failed, through the actions of its former president, to eliminate payments to the group for the interpretations of [arterial blood gas] tests that were not performed, and that [the hospital] knew such payments were not in compliance with federal legal requirements.”

This settlement highlights the importance of ensuring that payments to referring physicians are reduced to a written agreement and that the payments and services are consistent with what the written agreement says. Relationships may evolve over time, and hospitals need to be vigilant in revising agreements with physicians as the terms and conditions of the relationships and the needs of the parties change.