A Florida hospital recently reached an agreement with the U.S. Department of Justice to pay $85 million to settle part of a whistleblower lawsuit initiated by a former employee who accused the hospital of illegal kickbacks to its cancer doctors and neurosurgeons, and Medicare fraud. (U.S. et al. v. Halifax Hospital Medical Center et al., case no. 6:09-cv-01002, U.S. District Court for the Middle District of Florida). This case was closely watched by healthcare entities, as potential liability reportedly exceeded $1 billion.
The plaintiff, a former hospital employee, brought suit against the hospital in 2009 for alleged violations of the Stark Law and the False Claims Act's (FCA) Anti-Kickback Statute. The former employee claimed, among other things, that physicians made medically unnecessary referrals to the hospital that were then processed through Medicare.
The Department of Justice intervened in the case in 2011. This is not the first time the federal government has intervened in these types of matters, and likely will not be the last. In May 2009, Attorney General Eric Holder and U.S. Department of Health and Human Services Secretary Kathleen Sebelius announced the Health Care Fraud Prevention and Enforcement Action Team initiative, exemplifying the government's focused efforts to reduce and prevent Medicare and Medicaid financial fraud. Since January 2009, the Justice Department has recovered billions of dollars through False Claims Act cases involving fraud against federal healthcare programs.
Claims unaffected by the settlement (including claims that the hospital inflated revenue by admitting patients for unnecessary overnight stays) are set for trial in July and carry potential liability of up to $400 million for the hospital.