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Missouri Hospital Pays $9.3 Million to Settle False Claims Act and Stark Law (Healthcare Fraud) Violations for Compensating Physicians for Referrals

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The Department of Justice has announced that Freeman Health System, a healthcare provider and hospital system located in Joplin, Missouri, will pay $9,316,139 to settle allegations that it violated the False Claims Act and Stark Law for improperly compensating physicians for referrals.

The lawsuit alleged that Freeman provided seventy physicians employed at clinics operated by Freeman with incentive pay based on revenue generated by their referrals for diagnostic testing and other services provided by the hospital. Disclosures made to the U.S. Attorney for the Western District of Missouri showed that several physicians were made eligible for incentive compensation based on the value and volume of referrals they made to the hospital. The United States conducted an investigation and found that Freeman knowingly violated Stark Law by compensating these physicians. Stark Law prohibits hospitals from billing Medicare for certain services based on referrals from physicians that have a financial relationship with the hospital because this arrangement could potential create an incentive to refer patients for those procedures.

David M. Ketchmark, Acting U.S. Attorney for the Western District of Missouri, stated:

“Our priority is protecting the patients… These laws are intended to ensure that physicians make referrals for health care services based solely on the medical needs of their patients rather than any financial incentives. These laws also protect the integrity of the government-funded health care benefit programs.”

The Employment Law Group® law firm’s whistleblower attorneys have helped many clients file suit against employers that fraudulently bill the U.S. government, and have established favorable precedents under the retaliation provision of the False Claims Act.

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