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Why a Medical Lawyer Tracks Large Hospital Stark Law Cases

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A hospital lawyer protects large entities against Stark law violations. Our office represents individual physicians and medical groups. It is our view that most Stark violations are inadvertent and often arise from poor business advice rather than greed or an intention to violate the law. We look for cases involving very large medical entities charged with Stark violations to make that if large corporations advised by fancy big firm hospital attorneys can step into the Stark morass and escape with a slap on the wrist, why should our physicians be held to a stricter standard.

We follow the money and the United States files Stark violation cases on a cost benefit basis.  Large cases are profitable.  But for every large hospital charged with a Stark violation there are physicians and medical groups that are charged at the same time.  The "nice" hospital attorney who worked with you to sign the agreements is suddenly an adversary and likely will not even take your calls.

Community Health Network

A recent case involved a large non-profit health network, Community Health Network in Indianapolis.  CHN had to pay $345 million to resolve allegations that it violated the False Claims Act. The allegation was that they deliberately (“knowingly”) submitted false Medicare claims.  We will look at that case in a minute but first the question, "How does our firm of physician lawyers use this case to help our practitioners"?

First we look at odd factors that distinguish the Community Health Network case from our (typical) case.  What stood out that made Community Health Network a target?

In this case the Medicare claims were for services referred by physicians who the United States prosecutors alleged were paid salaries that were well above the fair market value for their services and/or they had a bonus system that rewarded them for making improper claims. This was objective criteria showing a direct profit motive to make false claims. It was gross and obvious.

In defending False Claims Act, AKS and similar claims, we look for these trigger issues to know whether a case is defensible. Direct incentives for wrongdoing are rare. Often a medical practice will rely upon certain practices to survive but in the Community Health Network case the extreme compensation was like a finger pointing toward guilt.

Other large entity cases are instructive.

Adventist Health System

In 2015 Adventist Health System paid $115 million to settle allegations that it violated the False Claims Act. This also involved improper compensation arrangements with referring physicians. The allegations also included miscoding allegations. In the Adventist case patients were referred by employed physicians and bonuses were paid that took into account the value of the physicians’ referrals to Adventist hospitals. So once again the bonus payment to doctors was the finger pointing to guilt.

You can see the pattern. The Horowitz medical defense lawyers know these patterns and if you consult us and we see a bonus system for referrals, we are going to immediately focus on that point in your interview.

St. Joseph Medical Center 

In 2010 St. Joseph Medical Center (Maryland) had to pay $ 22 million to resolve various violations. This case is different as it involved more medically based violations. There were violations of the Anti-Kickback Act and Stark Law arising from professional services contracts with a cardiology group. (Our office would not represent the hospital in a case like this but we would represent the cardiology group and its individual doctors.) The government claimed that payment billed above fair market value. The government claimed that there were bills for services not rendered or unnecessary. These types of allegations are often harsh when read but in practice may in fact be just medical disagreements and even normal billing errors.

Many physician groups trust the hospital lawyers to properly frame business relationships. Unfortunately, there is often a conflict between the hospital attorney’s interest in maximizing his client’s revenues and protecting the contracting medical groups. The Stark Law includes exceptions that allow hospitals and doctors to refer cases. The problem is the structure. The hospital wants to create an incentive for referrals and that lawyer is often closely tied to the executive level of the hospital and not the organized medical staff or even the board of directors. In other words, the lawyer is the hospital executive management’s partner and most executive salaries are tied to revenue and profit. (Even in a non-profit hospital.)

Physician Protection

It is important for contracting physicians and physician groups to remember that contracts and payments that a hospital makes to a referring physician must reflect fair market value for the physician’s actual services, and not take into account the volume or value of the physician’s referrals to the hospital.  Contracts should always be a medical group lawyer and the hospital attorney should be kept at arms length. (Trusted to a point but not embraced.)

If you have questions about false claims, Stark, AKS or other financial violations, please contact Daniel Horowitz as soon as possible. Daniel’s office is in Lafayette, California (Contra Costa County). He has affiliated attorneys in New York, Philadelphia, Washington State and throughout the State of California.