DOJ’s Continuing Focus on Stark Whistleblower Cases Leads to Large Settlements

By Zachary Trotter

Recent press releases from the Center for Medicare and Medicaid Services (CMS) indicate that the Department of Justice (DOJ) continues its focus of holding health care providers accountable for Stark Law violations. In just the past few weeks, three settlement agreements have resulted in more than $225 million in penalties paid to the government by various health care providers for allegations that the providers violated Stark and other federal laws.

Since August 13^th, the DOJ has announced that providers in North Carolina, Florida, Georgia and Missouri have agreed to pay $115 million, $69.5 million, $35 million and $5.5 million to settle allegations that the providers violated the Stark Law by paying for referrals, which in turn led to the submission of false claims to the government in violation of the False Claims Act. In just the last two weeks, the DOJ has announced two record settlement amounts. The $115 million settlement with Adventist Health System represents the largest Stark settlement ever reached without litigation, outpacing the $69.5 million settlement with North Broward Hospital District announced only last week, according to Modern Healthcare.

Notably, all four cases arose from lawsuits filed by whistleblowers. Three of the settlements identified above were originally filed by a physician offered an employment agreement that allegedly violated Stark, by a former hospital executive and by a physician employed by one of the defendants.

Since the 2009 creation of the Health Care Fraud Prevention and Enforcement Action Team initiative by the Secretary of Health and Human Services, the DOJ has recovered a total of more than $24.9 billion through False Claims Act cases, with more than $15.9 billion of that amount recovered in cases involving fraud against federal health care programs. Recent statements by officials in both the DOJ and HHS indicate that this heightened focus on health care organizations will continue for the foreseeable future.

“Health care organizations paying physicians based on referrals undermines public trust in medical institutions and the financial integrity of federal health care programs,” said Special Agent in Charge Gerald T. Roy of the U.S. Department of Health and Human Services Office of Inspector General. “We will aggressively pursue organizations that engage in conduct detrimental to taxpayers and government health programs.”

These “settlements demonstrate our continuing vigilance to ensure that health care referrals are based solely on the medical needs of the patient and that health care providers bill the government only for the care they provide,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Healthcare providers who seek to profit at the expense of taxpayers will face serious consequences.”

“The type of conduct alleged puts access [to services] at risk,” said U.S. Attorney Michael Moore of the Middle District of Georgia. These settlements demonstrate “the Department of Justice’s commitment to make sure that hospitals and physicians who commit violations of federal law are held to account, and that [the DOJ] continues to have appropriately functioning health care providers accessible to the wide array of communities they serve.”

Fraud enforcement may be the only government initiative with truly bipartisan support in Washington, DC., and with the DOJ’s current winning streak and record-breaking settlements, there’s no reason for health care providers to think that enforcement actions won’t remain a high priority for the government in the future.

Zachary Trotter is an associate with Waller where he practices health care law.