Recent DOJ Complaint Targets Hospital’s Compensation Arrangements with Physicians

On March 25, 2019, the U.S. Department of Justice (DOJ) filed a 49-page, multi-count complaint in Pennsylvania federal court against Wheeling Hospital in West Virginia, citing the hospital’s payments to physicians as violating the Anti-Kickback Statute, Stark Law and False Claims Act (FCA). The alleged fraud scheme includes, but is not limited to, incentive compensation paid to physicians employed by the hospital and suspect equipment rental arrangements with a radiology group. The compensation is alleged to be improper because it exceeds the fair market value for the physicians’ services and/or is tied to the volume or value of the physicians’ referrals of federal healthcare program business.  

Notably, the DOJ filed its complaint as part of a qui tam (i.e., “whistleblower”) action initiated by a former hospital executive who accused Wheeling of knowingly overpaying physicians to secure their referrals for the purpose of increasing the hospital’s Medicare revenues – a strategy that was allegedly endorsed by a consulting firm co-founded by Wheeling’s current CEO. 

In its complaint, the DOJ asserts, among other things, that the Hospital was unjustly enriched by millions of dollars of reimbursement by the Medicare program for claims that were ineligible for payment because of Wheeling’s unlawful conduct. The suit seeks to recover treble damages and civil penalties. Wheeling’s CEO and his consulting firm are also named as defendants for their roles in the alleged scheme.

Hospital-physician relationships must be carefully planned and executed, and periodically reviewed by competent healthcare attorneys for ongoing compliance. Frier Levitt’s regulatory team has significant experience evaluating these relationships, restructuring them to mitigate risk, and when appropriate, assisting the parties in affirmatively disclosing possible violations to the federal government to reduce the specter of severe penalties that often result from independent government investigations and whistleblower lawsuits. Contact Frier Levitt to speak with an attorney.

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