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California Hospital Pays $3.2 Million to Settle Self-Reported Stark Violations

Tri-City Medical Center in Oceanside, California has agreed to pay $3.28 million to settle allegations that its payment arrangements with doctors and physician groups violated the Stark Law. Tri-City self-reported the potential violations, which date back to its 2009-2010 fiscal year, in 2011 and had been negotiating a settlement ever since.

Subject to certain exceptions, the Stark Law generally prohibits hospitals from billing Medicare for services referred by physicians with whom it has a financial relationship. The exceptions require, among other things, that the financial arrangements do not exceed fair market value, are commercially reasonable, and do not take into account the volume or value of any referrals. Additionally, compensation arrangements with non-employed physicians must be in writing and satisfy a number of other technical requirements.

Tri-City’s self-disclosure to OIG involved almost 100 physician agreements that were not compliant with Stark. Five of the 97 compensation arrangements at issue, which were with the former chief of the hospital’s medical executive committee, exceeded fair market value, and the remaining 92 contracts were allegedly expired, unsigned, or could not be located. 

Unlike several of the major settlements recently entered into by hospital systems to resolve allegations related to excessive physician compensation, all of which arose from whistleblower suits, this settlement was a direct result of Tri-City’s compliance with OIG’s self-disclosure protocol and serves as an important reminder that even accepted self-disclosures do not always preclude FCA lawsuits.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume VI, Number 43
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About this Author

Brian F. McEvoy Litigation Attorney Polsinelli Atlanta, GA
Office Managing Partner | Practice Chair

Brian McEvoy is an accomplished litigator with a well-earned reputation for working tirelessly to achieve the best outcomes for clients and for thinking creatively and strategically to resolve difficult problems with efficiency and professionalism. Brian is a former federal prosecutor with a practice focus on white collar criminal defense and a special emphasis in health care fraud matters. During his service as a federal prosecutor, he received special commendation from the Department of Health and Human Services by receiving the Inspector General's Integrity Award for...

404-253-6021
Emma R. Cecil, Polsinelli PC, Government Investigations Lawyer, White Collar Defense Attorney, Atlanta
Attorney

With the goal of advancing and protecting each client’s unique interests, Emma Cecil brings a keen attention to detail, strategic thinking, and a practical, results-oriented approach to all of her cases. As part of the firm’s Government Investigations and White Collar Defense group, Emma focuses her practice on defending individuals in a range of white collar matters and representing health care providers in whistleblower actions brought under the False Claims Act, including those involving the Anti-Kickback Statute and Stark law. Emma also regularly represents health...

404-253-6029
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