HCA Allegedly Paid Inflated Rents to Induce Referrals from Medical Practice

In 2007, Thomas Bingham’s company was contacted by HCA to do a market rent study of a medical office suite in Chattanooga, Tennessee. Based on his thorough analysis, Mr. Bingham determined that an equivalent net rental rate of approximately $8.10 to $10.10 per square foot represented fair market value.

Much to his surprise, HCA hospital Parkridge Medical Center then rented the space from a group of physicians at nearly $13 per square foot. In order to justify the reasonableness of paying more for the office suite, HCA had obtained a second fair market value study, from an unlicensed and uncertified appraiser and “split (some of) the difference” with Bingham’s fair market value study.. The medical practice regularly referred patients to the hospital.

In 2008, Mr. Bingham filed a False Claims Act qui tam action, alleging that the hospital provided, and caused others to provide, unlawful remuneration to the medical practice in order to obtain patient referrals; disguised this illegal remuneration as legitimate payments under real estate leasing arrangements and as an assignment of an existing real estate lease; knowingly solicited and relied on an erroneous real estate market rent/FMV appraisal; and submitted, and caused others to submit, to the federally sponsored health care programs, including Medicare and Medicaid, false claims in violation of the Stark Statute and the Anti-kickback statute.

Recently, the federal government intervened and settled Mr. Bingham’s qui tam action for $16.5 million.

More information for whistleblowers is located at the Nolan Auerbach website.