Hospital Violates False Claims Act by Allegedly Failing to Properly Administer Physician Recruitment Compensation

According to a recent DOJ press release, St. Mary’s Medical Center has agreed to pay the government a total of $2.3 million to settle alleged False Claims Act violations related to the hospital’s administration of income guarantee agreements with 15 physicians.

According to the government, between January 2005 and August 2010, in 15 physician income guarantee agreements for recruited physicians, St. Mary’s failed to properly administer the terms of certain recruitment contracts. This resulted in net overpayments to certain recruited physicians.  Because those physicians and their practices referred patients to the hospital for medical treatment that was billed to government health care programs, the government  alleged that false claims were submitted to the government.

When hospitals discover such overpayments of government funds, they are obligated to promptly notify the government and repay the funds. Hospitals that skirt this obligation run afoul of the reverse False Claims Act liability provision, 31 U.S.C. 3729(a)(1)(G). By notifying the government, St. Mary Medical Center avoided a much steeper payment.

Certainly, when it comes to hospitals improperly administering terms of recruitment contracts, St. Mary Medical Center is far from alone. Indeed, in the current competitive environment, hospitals across the country are willfully or negligently turning a blind eye to the overpayment recruitment funds. When hospitals fail to report such overpayments, the government handsomely incentivizes the hospital employees under the qui tam provisions of the False Claims Act.

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