Whistleblower Law Blog

Cardiology Group Will Pay $1.3 Million to Settle Claims of Improper Referrals

The U.S. Department of Justice (DOJ) said it obtained a $1.3 million settlement of allegations that a cardiology practice violated the False Claims Act and the Stark Act by knowingly compensating its physicians based on the number of tests that the physicians referred.

The Stark Act prohibits a physician from referring Medicare patients for designated health services to an entity with which the physician has a financial relationship (unless an exception applies). The Stark Act does not permit a practice to compensate a physician based directly on the volume or value of the physician’s referrals for services not personally performed by the ordering physician.

The DOJ received a tip that Cardiovascular Specialists, P.C., d/b/a New York Heart Center (NYHC),compensated its physicians in a manner that violated the Stark Act. From September 2007 through August 2008, NYHC allegedly determined the compensation for its physicians by taking into account the value of the physicians’ referrals for nuclear scans and CT scans. The government’s investigation revealed that NYHC knew that this compensation formula could have violated the Stark Act.

“Medical decisions should always be made on the basis on what’s best for the patient’s health, not the physician’s finances. The compensation system in place in this case had the potential to influence medical judgment, which would be unacceptable,” said Thomas O’ Donnell, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), New York region.

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