In conclusion of an investigation apparently initiated in 2005, Covenant Medical Center (Covenant) in Waterloo, Iowa, has agreed to pay $4.5 million to settle allegations relating to its financial relationship with employed physicians. The government alleged that Covenant violated the Stark Law, and thereby submitted false claims in violation of the False Claims Act, by paying five employed physicians who referred patients to Covenant for treatment commercially unreasonable compensation in amounts alleged to be far in excess of fair market value. The U.S. Department of Justice stated in its press release that the "physicians were among the highest paid hospital-employed physicians not just in Iowa, but in the entire United States." The physicians included orthopedic surgeons and a gastroenterologist and the compensation received by some of the physicians reportedly exceeded $2 million.
Covenant has denied the allegations and any wrongdoing and contends that the physician's compensation reflected their exceptionally high level of productivity.