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Above-Market Cardiologist Salaries Result in $41 Million Stark Law Settlement

Hospital Pays $41 Million to Settle Claims that “Unreasonably High” Cardiologist Salaries Violated the Physician Self-Referral Law

King’s Daughters Medical Center agreed to pay almost $41 million to settle allegation that it submitted false claims to Medicare and Medicaid for coronary stents and diagnostic catheterizations.

The government claimed that the hospital violated the Stark Law, also known as the physician self-referral law, which prohibits certain types of financial relationships between hospitals and physicians.  In this case, the government claimed that the hospital paid above-market salaries to cardiologists to induce them to refer patients to the hospital.

Once an improper financial relationship exists, all claims for reimbursement from Medicare or Medicaid that arise out of that relationship are considered “false claims,” even if the patient received medically appropriate care.  In this case, however, the government alleged that the financial relationship also resulted in medically unnecessary procedures.

As a result of the improper financial incentives, the government alleged, Medicare and Medicaid were billed for medically unnecessary diagnostic catheterizations and cardiac stents.  The government also alleged that the physicians falsified medical records to justify the unnecessary cardiac procedures.

The Stark Law is very complex and contains exceptions to ensure that physicians can be fairly compensated.  A related law known as the Anti-Kickback Statute is similarly complex and contains so-called “safe harbors.”  Compliance with both laws is strictly enforced and must be properly documented.

Violations of the Stark Law or Anti-Kickback Statute can result in civil penalties including treble damages, criminal prosecutions, and disciplinary action against the professionals involved.

If you are being investigated for potential Stark Law violations, or if you have evidence that a hospital is engaged in improper financial relationships with physicians, then you should consult with an experienced Medicare and Medicaid fraud lawyer immediately.

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