An article in Becker’s ASC Review examines the ongoing False Claims Act litigation involving Erlanger Health System and the potential implications for physician compensation arrangements and Stark Law compliance. The lawsuits allege that Erlanger compensated physicians based on the value of downstream referrals rather than the fair market value of personally performed services, resulting in alleged violations of the Stark Law and Anti-Kickback Statute. Following a federal court’s denial of Erlanger’s motions to dismiss, the case will now proceed to discovery.
The article highlights analysis from Daniel Frier, who previously examined the case’s implications for healthcare providers. Dan noted that physician compensation arrangements that appear commercially aggressive or are justified by downstream referral revenue may attract government scrutiny under federal fraud and abuse laws, even when supported by a third-party fair market value opinion.
As the case moves forward, it serves as an important reminder that fair market value documentation alone may not be sufficient to withstand regulatory scrutiny, particularly when compensation structures could be perceived as being tied to referral activity.
Co-Managing Partner
