Detroit hospital hit with $84.5 million settlement over false claims allegations

Detroit-based William Beaumont Hospital has agreed to pay $84.5 million to resolve allegations the system maintained improper relationships with eight referring physicians, which resulted in the submission of false claims to the Medicare, Medicaid and TRICARE programs, the Justice Department announced. 

Stark Law prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper financial arrangement. Those can include compensation exceeding fair market value of the actual services provided or below-market rent and office staff. 

"Both the Anti-Kickback Statute and the Stark Law are intended to ensure that physicians' medical judgments are not compromised by improper financial incentives and instead are based on the best interests of their patients," the DOJ said.

The allegations were first brought in four whistleblower lawsuits which said that between 2004 and 2012, Beaumont provided compensation "substantially in excess of fair market value and free or below-fair market value office space and employees" to a select group of physicians in exchange for those physicians' referrals of patients, then submitted claims for services provided to those patients, the DOJ said.

The settlement also resolves allegations that Beaumont allegedly misrepresented the status of a CT radiology center as an outpatient department of Beaumont in claims to federal healthcare programs.  

Per the settlement, Beaumont will pay $82.74 million to the United States and $1.76 million to the State of Michigan. 

Improper physician relationships have proven a costly pitfall for other systems as recently as May, when Mercy Health was hit with a $14 million over allegations that the system paid six employed physicians, including an oncologist and five internal medicine physicians, above and beyond fair market value for their services. Mercy Health disclosed the misstep to the government, according to the DOJ.

In July, the biggest healthcare fraud takedown in history was announced by the DOJ, with roughly 600 defendants including 165 doctors, nurses and other licensed medical professionals charged in schemes yielding more than $2 billion in false billings. Almost a third of the defendants were charged for their roles in prescribing and distributing opioids and other "dangerous narcotics," the DOJ said.

Twitter: @BethJSanborn
Email the writer: beth.sanborn@himssmedia.com