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Physician-Owned Hospital Agrees to Pay $7.5 Million to Settle False Claims Act Allegations

A physician-owned hospital in Dallas, Texas recently reached an agreement with the federal government to pay $7.5 million to settle allegations that it paid kickbacks to physicians in violation of the federal Anti-Kickback Statute (AKS) and False Claims Act (FCA). The government’s allegations centered on claims that Pine Creek Medical Center provided free marketing services to physicians in exchange for referrals involving Medicare and TRICARE beneficiaries. The allegations were first brought in a lawsuit filed under the FCA’s qui tam (or whistleblower) provisions by two former employees of Pine Creek’s marketing department. Those whistleblowers will receive $1,125,000.

According to the government, from 2009 to 2014, Pine Creek paid for a variety of marketing services for physicians who referred patients to Pine Creek. Such marketing services included advertising on television and radio, pay-per-click online campaigns, billboards, pamphlets, and even business cards. The government alleged that these valuable marketing services provided by Pine Creek constituted kickbacks because the free marketing was used to reward and induce the physicians for their referrals to Pine Creek. The AKS makes it illegal for anyone to offer, solicit, give or receive anything of value that would induce someone to make referrals for items or services paid for by federal health programs like Medicare, Medicaid, and TRICARE.

In addition to the $7.5 million settlement, Pine Creek also agreed to enter a Corporate Integrity Agreement with HHS-OIG. Under that agreement, Pine Creek will be required to implement extensive compliance procedures and observe strict reporting requirements with HHS-OIG for the next five years in order to continue participating in federal health programs.

The attorneys at CCLB represent healthcare providers of all types and sizes in connection with government investigations, False Claims Act litigation, and a wide variety of regulatory and compliance matters, including those involving the Stark Law, Anti-Kickback Statute, and False Claims Act. For any questions, or if we can assist you in connection with such a matter, please contact us at (404) 262-6505 or sgrubman@cclblaw.com.