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U.S. Department of Justice Announces $16.5 Million Settlement with HCA, Inc. for False Claims Act and Stark Law Claims

September 21, 2012

On September 19, 2012, the U.S. Department of Justice (“DOJ”) announced that HCA, Inc. (“HCA”), a large national for-profit hospital chain, has agreed to pay the federal government and the state of Tennessee $16.5 million to settle False Claims Act and Stark Law allegations.

HCA, through its subsidiaries, is alleged to have entered into several arrangements with a physician group in which financial benefits were offered to induce the physicians to refer patients to HCA facilities.  Among those inducements was the payment of rent for office space from the physician group at a rate far above fair market value, which was used by members of the group to pay off mortgages.  Under the Stark Law, rent under lease arrangements must be fair market value.

Notably, the settlement was a result of a qui tam, or whistleblower, action.  Under the False Claims Act, a private citizen is permitted to bring civil actions on behalf of the government for violations of its provisions and to share in any recovered funds.  In this case, the whistleblower will receive an 18.5% share of the settlement amount.

This case serves as a reminder to all providers of the serious legal and financial implications of violating the False Claims Act and the Stark Law.  Compliance with the False Claims Act is imperative due to its qui tam provision, which gives tremendous incentive to employees and other third parties to report potential violations to the government.   Additionally, providers must closely scrutinize any financial arrangements they may enter into with physicians for compliance with the Stark Law.

If you have any questions about compliance with the False Claims Act or the Stark Law, please contact any of the members of the Shipman & Goodwin Health Law Practice Group.

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