CALIFORNIA
A Los Angeles hospital agreed to pay $42 million to settle allegations that they improperly engaged in financial relationships with physicians, according to officials.
The settlement, announced Wednesday, alleges that PAMC Ltd., and Pacific Alliance Medical Center Inc., which together own and operate Pacific Alliance Medical Center, an acute care hospital violated the False Claims Act.
“This is another example of how the False Claims Act whistleblower provisions can help protect the public fisc,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers.”
The settlement, brought by a whistleblower lawsuit, resolves issues involving false claims to the Medicare and MediCal programs.
This was for cases where services were rendered to patients referred by physicians with whom the medical facilities had improper financial relationships, according to authorities.
These relationships took the form of the following:
(1) arrangements under which the defendants allegedly paid above-market rates to rent office space in physicians’ offices
(2) marketing arrangements that allegedly provided undue benefit to physicians’ practices.
The lawsuit alleged that these relationships violated the Anti-Kickback Statute and the Stark Law, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.
The lawsuit was filed by Paul Chan, who was employed as a manager by one of the defendants, under the qui tam provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery, officials said.
The federal government may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action. Mr. Chan will receive over $9.2 million as his share of the federal recovery, according to officials.
“Federal law prohibits improper financial relationships between hospitals that receive federal health care funds and medical professionals – this is to protect the doctor-patient relationship and to ensure the quality of care provided,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “Patients deserve to know their doctors are making health care decisions based solely on medical need and not for any potential financial benefit.”