Qui Tam Lawsuit Leads to $3.2 Million Payment from Catholic Health System

Doctors, hospitals and other types of healthcare providers have a profound legal and moral responsibility to act in their patients’ best interests. Making secret arrangements to steer patients to particular entities where the doctor has a financial stake breaches this duty. Moreover, these schemes violate the Physician Self-Referral Law, commonly referred to as the Stark Law.

The U.S. Attorney for the Western District of New York announced that Catholic Health System, Inc. (CHS) paid $3,293,122.66 to resolve allegations stemming from Stark Law violations. The statute bars entities from filing Medicare claims submitted by doctors who have a financial interest with the entity providing the service. For example, a physician who owns part of an MRI facility cannot seek payment from Medicare for an exam conducted at that facility. 

In this case, the government alleged that CHS and its affiliated hospitals had improper financial relationships with non-employee physicians. These physicians referred services, including laboratory testing, hospital care and the dispensation of medical supplies, to CHS and its affiliated hospitals. Subsequently, CHS billed Medicare for these services, resulting in filings that were not allowed under the False Claims Act (FCA). 

Former CHS executive Gary Tucker initiated the legal proceeding as a relator in a qui tam lawsuit. Under the FCA's whistleblower provisions, private individuals can stand in for the government in fraud cases and receive a portion of the recovery. As realtors’ shares in whistleblower cases usually amount to between 15 and 30 percent of what is transferred to the government, Tucker’s award could be $450,000 or more. This provision serves as a powerful tool for uncovering fraud and holding entities accountable, broadening the scope of oversight beyond government agencies.

For its part, Catholic Health Services stressed that the fraudulent activity that led to the settlement did not affect patient care. However, the unlawful self-dealing and deceptive practices justified the substantial payment to the government. 

Kardell Law Group provides exceptional advice and advocacy qui tam relators in the medical industry and other fields. Please contact us of you aware of a situation where a healthcare provider is authorizing claims in order to gain an improper financial benefit.