Lexington Medical Center will pay $17 million to settle physician referral, overpayment allegations
Hospital overpaid physicians and rewarded them based on their referral of patients to the facility, the Department of Justice said.
Lexington Medical Center in West Columbia, South Carolina will shell out $17 million to settle allegations it violated the Stark Law and False Claims Act by overpaying physicians to refer patients to their facility, the Department of Justice announced Thursday.
According to the DOJ, Lexington Medical Center entered into agreements with physician practices they acquired as well as employment contracts with 28 physicians that "took into account the volume or value of physician referrals, were not commercially reasonable, or provided compensation in excess of fair market value," the DOJ said.
As such, Lexington Medical will pay $17 million and must also abide by the Corporate INtegrity Agreement it entered into with the Department of Health and Human Services-Office of the Inspector General that requires them to institute measures that will help them avoid any future conduct similar to what was alleged in the settlement.
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The Stark Law seeks to ensure that physician make referrals based on a patient's needs and are not tainted by certain financial arrangements. It generally forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the hospital unless that relationship falls within certain very specific exceptions that usually mandate that the financial arrangements "do not exceed fair market value, do not take into account the volume or value of any referrals and are commercially reasonable."
The agreement resolves a whistleblower lawsuit filed in federal court by Dr. David Hammett, a former physician who worked for Lexington Medical Center. As is the standard with whistleblower, or qui tam lawsuits, Dr. Hammett will share in the recover. As such, he is expected to receive $4.5 million of the funds recovered through the settlement.
"This case demonstrates the United States' commitment to ensuring that doctors who refer Medicare beneficiaries to hospitals for procedures, tests and other health services do so only because they believe the service is in the patient's best interest, and not because the physician stands to gain financially from the referral," said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department's Civil Division.
"We are pleased to be able to resolve this matter and to commit all our resources to the care we provide patients. After cooperating fully with the federal government throughout this entire process, Lexington Medical Center will continue to strengthen our efforts to ensure full compliance by evaluating internal and external processes," said Tod Augsburger, President & CEO. "We are proud of the relationships we have with our physicians and the outstanding care they provide to our patients every day."
Twitter: @BethJSanborn
