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Federal authorities have secured several significant settlements with hospitals and health systems for False Claims Act violations in 2024, with many cases involving alleged Stark Law and Anti-Kickback Statute infractions. The Department of Justice continues to prioritize healthcare fraud enforcement, targeting improper physician compensation arrangements and billing irregularities.
Among the notable settlements, ChristianaCare, a Delaware health system, paid $42.5 million to resolve allegations involving an improper billing arrangement with a neonatology practice. The case, initiated by the system’s former chief compliance officer, centered on claims that ChristianaCare provided free clinical support to the practice while allowing them to bill globally for services primarily performed by hospital staff.
In Tennessee, Methodist Le Bonheur Healthcare agreed to pay $7.25 million following allegations that its affiliation with an oncology practice included compensation based on referral values, particularly for chemotherapy treatments that generated 340B program profits. This case was brought by former executives of affiliated institutions.
New York Presbyterian/Brooklyn Methodist Hospital reached a $17.3 million settlement over claims that physicians at its chemotherapy infusion center received compensation based on referral volume and inadequately supervised treatments. The hospital’s voluntary self-disclosure resulted in a reduced settlement amount of approximately 1.5 times the alleged losses to the government.
Similarly, Dunes Surgical Hospital in Siouxland paid $12.76 million to settle allegations of providing free or below-market-value resources to an anesthesia practice and making financial contributions to a nonprofit affiliated with referring physicians. Their voluntary disclosure through the OIG’s Self-Disclosure Protocol earned them a reduced damages multiplier.
In California, Oroville Hospital agreed to a $10.25 million settlement and a five-year corporate integrity agreement to resolve claims it paid kickbacks to physicians based on patient admission volume, allegedly resulting in medically unnecessary inpatient admissions and inflated Medicare and Medicaid costs.
Medicare billing and coding violations also remained a significant enforcement focus. Silver Lake Hospital in New Jersey and its investors agreed to pay $30.6 million to resolve allegations of claiming excessive Medicare inpatient cost outlier payments, with the hospital entering into a corporate integrity agreement.
Penn State Health paid $11.7 million after self-disclosing improper documentation for Medicare annual wellness visits, while Cape Cod Hospital reached a $24.3 million settlement for allegedly billing Medicare for transcatheter aortic valve replacement procedures that failed to comply with required independent patient evaluations.
These cases underscore several key compliance considerations for healthcare providers. First, physician compensation arrangements require thorough legal review to ensure compliance with anti-kickback and self-referral laws. Second, proper medical record documentation is critical to support Medicare billing. Third, internal compliance reviews and voluntary self-disclosure can significantly reduce financial penalties when violations are identified.
The enforcement landscape shows no signs of slowing, with whistleblowers—often knowledgeable insiders like executives and physicians—continuing to play a pivotal role in bringing these cases forward. The Supreme Court’s recent determination that “knowledge” under the False Claims Act is subjective has further emphasized the importance of contemporaneously documenting compliance advice and payor communications.
Healthcare organizations should anticipate that these enforcement trends will continue throughout 2025, even under new DOJ leadership, as the government maintains its focus on protecting federal healthcare programs from fraud and improper payments.
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9 Comments
The New York Presbyterian case highlights how whistleblowers can play a major role in uncovering healthcare fraud. Former executives bringing these issues to light is an important enforcement mechanism.
Interesting to see the government continue cracking down on healthcare fraud. Stark Law and anti-kickback violations can lead to significant settlements if hospitals don’t carefully structure their physician arrangements.
Yes, the DOJ seems focused on rooting out improper billing and referral practices in the industry. Compliance is critical for hospitals to avoid these types of False Claims Act issues.
The Methodist Le Bonheur case touches on the 340B program, which has been a frequent target for enforcement. Tying physician affiliation to chemotherapy referrals that boost 340B profits is a big no-no.
Agreed, the 340B program has become a major focus for healthcare fraud investigations. Hospitals need to be very careful about how they structure their relationships with oncology practices.
The $42.5 million settlement with ChristianaCare is a hefty penalty. Providing free clinical support to a practice in exchange for global billing is clearly a conflict of interest that violates regulations.
Definitely a cautionary tale for hospitals to closely review their physician compensation arrangements. Even subtle financial incentives can trigger Stark Law and anti-kickback issues.
It’s concerning to see these types of violations occurring at major hospital systems like ChristianaCare and Methodist Le Bonheur. Robust compliance programs are essential to avoid these pitfalls.
Absolutely. Even large, sophisticated healthcare organizations can run afoul of the complex regulatory environment. Proactive compliance is key to mitigating False Claims Act risks.