APRIL 22, 2015
Three whistleblowers who alleged that a Texas-based hospital
overpaid doctors in exchange for patient referrals will split about $6 million
from a federal False Claims Act settlement.
Citizens Medical Center, a county-owned hospital in
Victoria, Texas, agreed to pay the United States nearly $22 million to settle
allegations that it violated the False Claims Act by paying several referring
cardiologists more than the fair market value of their services.
The settlement also resolved allegations that the hospital
paid bonuses to emergency room physicians based partly on the value of
their cardiology referrals, the DOJ said last week.
The Justice Department alleged the practices violated the
Stark Statute and the False Claims Act.
The Stark Statute restricts the financial relationships that
hospitals are allowed to have with doctors who refer patients to them.
The allegations arose from a lawsuit filed by three
whistleblowers -- Dakshesh “Kumar” Parikh, Harish Chandna, and Ajay Gaalla --
under the qui tam provisions of the False Claims Act. The three cardiologists
had privileges to practice at Citizens Medical Center at the time the alleged
offenses occurred.
They will collectively receive about $6 million from the
recoveries, the DOJ said.
Under the False Claims Act, private citizens can sue on
behalf of the government for false claims and share in any recovery.
The claims settled last week are allegations only and there
has been no determination of liability, the DOJ said.
In 2012, Citizens Medical Center paid the same three
cardiologists a total of $8 million in the negotiated settlement of another
lawsuit that alleged racketeering, conspiracy, and discrimination. As part of
that settlement, they resigned their hospital privileges.
The case is United States ex rel. Parikh, et al. v. Citizens
Medical Center, et al., Case No. 6:10-cv-64 (S.D. Tex.).
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Justice News
Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Tuesday, April 21, 2015
Texas-Based Citizens Medical Center Agrees to Pay United
States $21.75 Million to Settle Alleged False Claims Act Violations
Citizens Medical Center, a county-owned hospital in
Victoria, Texas, has agreed to pay the United States $21,750,000 to settle
allegations that it violated the False Claims Act by engaging in improper
financial relationships with referring physicians, the Justice Department
announced today.
“The Department of Justice has longstanding concerns about
improper financial relationships between health care providers and their
referral sources, because those relationships can alter a physician’s judgment
about the patient’s true health care needs and drive up health care costs for
everybody,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer
of the Justice Department’s Civil Division. “In addition to yielding a
recovery for taxpayers, this settlement should deter similar conduct in the
future and help make health care more affordable.”
“Any type of false claim or improper behavior under our
health care fraud laws are serious allegations that will not be taken lightly,”
said U.S. Attorney Kenneth Magidson of the Southern District of Texas.
“The settlement announced today represents the effectiveness of our
continuing efforts and an example of our priorities in this arena.”
The settlement announced today resolved allegations that the
hospital provided compensation to several cardiologists that exceeded the fair
market value of their services. The settlement also resolved allegations
that the hospital paid bonuses to emergency room physicians that improperly
took into account the value of their cardiology referrals. The United
States contended that these agreements violated the Stark Statute and the False
Claims Act. The Stark Statute restricts the financial relationships that
hospitals may have with doctors who refer patients to them.
The allegations settled today arose from a lawsuit filed by
three whistleblowers, Dakshesh “Kumar” Parikh, Harish Chandna and Ajay Gaalla,
under the qui tam provisions of the False Claims Act. Under the act,
private citizens can bring suit on behalf of the government for false claims
and share in any recovery. The whistleblowers will collectively receive
$5,981,250 from the recoveries announced today.
This settlement illustrates the government’s emphasis on
combating health care fraud and marks another achievement for the Health Care
Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was
announced in May 2009 by the Attorney General and the Secretary of Health and
Human Services. The partnership between the two departments has focused
efforts to reduce and prevent Medicare and Medicaid financial fraud through
enhanced cooperation.
One of the most powerful tools in this effort is
the False Claims Act. Since January 2009, the Justice Department has
recovered a total of more than $24 billion through False Claims Act cases, with
more than $15.3 billion of that amount recovered in cases involving fraud
against federal health care programs.
The case, United States ex rel. Parikh, et al. v. Citizens
Medical Center, et al., Case No. 6:10-cv-64 (S.D. Tex.), was handled by the
Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for
the Southern District of Texas and the U.S. Department of Health and Human
Services’ Office of Inspector General. The claims settled by this
agreement are allegations only, and there has been no determination of
liability.