Lynchburg, VIRGINIA – Centra Health Inc. and Blue Ridge Ear,
Nose, Throat and Plastic Surgery, Inc. have agreed to pay the government
$9,345,845 to settle claims alleging they violated the False Claims Act and the
Virginia Fraud Against Taxpayers Act by engaging in improper financial
relationships. Centra and its affiliates are nonprofit corporations operating
hospital facilities in the Lynchburg-area including Southside Community
Hospital, Virginia Baptist Hospital, and Lynchburg General Hospital. Blue Ridge
ENT is a physician practice group in Lynchburg that refers patients to Centra’s
hospital system. The settlement involved financial relationships Centra and its
affiliates had with several referring physicians and groups including Blue
Ridge ENT in violation of the Stark Law, the Anti-Kickback Law, and other
federal regulations that restrict the financial relationships hospitals may
have with physicians who refer patients to them. Centra proactively came
forward, self-disclosed its violations of the False Claims Act, and worked with
the government to resolve these issues.
First Assistant United States Attorney Daniel P. Bubar,
Virginia Attorney General Mark Herring, and Maureen R. Dixon, Special Agent in
Charge for the Office of Inspector General of the U.S. Department of Health and
Human Services, announced the settlement today.
“Health care cases continue to be a top priority in our
office,” First Assistant United States Attorney Bubar said today. “Improper
financial relationships between hospitals and their referral sources can
compromise a physician’s medical judgment, increase health care costs, threaten
the integrity of the healthcare system, and endanger the public’s trust. The
settlement announced today reflects not only our willingness to work with our
community partners who review their own practices and make appropriate
self-disclosures, but also the importance of our False Claims Act whistleblower
provisions that encourage private citizens to contribute to our efforts to
identify and eliminate fraud.”
“This settlement sends a strong message that improper
financial relationships between hospitals and their referral sources will not
be tolerated in Virginia,” said Attorney General Herring. “When a hospital
enters into an improper financial relationship with their referral sources it
could not only harm the care a patient receives but it also undermines the
integrity of the whole health care system. I want to thank our local and
federal partners as well as my Medicaid Fraud Control Unit for their hard work
and collaboration on this case.”
“Centra and its affiliated hospitals stepped up and
self-disclosed their improper relationships with physician groups, including
blatant violations of the Stark self-dealing law, compensation for referrals,
and problematic physician recruitment agreements,” said Maureen R. Dixon,
Special Agent in Charge of the Office of Inspector General for the U.S.
Department of Health and Human Services.
“We will continue working closely with our State and Federal partners to
protect the integrity of government health programs.”
As part of the settlement announced today, Centra identified
physician recruitment agreements with physicians who had already relocated to
south-central Virginia, physician employee compensation arrangements that took
into account the value of referrals for in-office laboratory tests, financial
arrangements with physicians that were not memorialized in a written and
executed contract, and agreements with trauma call coverage physicians and an
oncology practice that did not satisfy any exception to the Stark Law.
Blue Ridge ENT allegedly had a financial relationship with
Centra to guarantee income to one of its physicians where Centra agreed to
reimburse Blue Ridge ENT for actual additional incremental costs attributed to
that physician. Blue Ridge ENT, however, knowingly claimed and received
reimbursement beyond what would be allowed by the Stark Law and the
Anti-Kickback Law. These allegations were brought in a lawsuit filed by a
former Blue Ridge ENT physician under the qui tam provisions of the False
Claims Act, which permit private individuals to sue on behalf of the government
and share in any recovery. The Act permits the government to intervene in, and
take over, the whistleblower’s suit or for the whistleblower to pursue the
action on the government’s behalf. The relator will receive a share of the
settlement.
The case was handled by Sara Bugbee Winn, Assistant United
States Attorney at the United States Attorney’s Office for Western District of
Virginia, Christina K. McGarvey, Senior Counsel for the Office of Inspector
General of the Department of Health and Human Services, and Kimberly M. Bolton,
Assistant Attorney General in the Virginia Attorney General’s Medicaid Fraud
Control Unit. The claims settled by this agreement are allegations only, and
there has been no determination of liability.
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