Three whistleblowers who alleged that a Texas-based hospital overpaid doctors in exchange for patient referrals will split about $6 million from a federal False Claims Act settlement.
Citizens Medical Center, a county-owned hospital in Victoria, Texas, agreed to pay the United States nearly $22 million to settle allegations that it violated the False Claims Act by paying several referring cardiologists more than the fair market value of their services.
The settlement also resolved allegations that the hospital paid bonuses to emergency room physicians based partly on the value of their cardiology referrals, the DOJ said last week.
The Justice Department alleged the practices violated the Stark Statute and the False Claims Act.
The Stark Statute restricts the financial relationships that hospitals are allowed to have with doctors who refer patients to them.
The allegations arose from a lawsuit filed by three whistleblowers — Dakshesh “Kumar” Parikh, Harish Chandna, and Ajay Gaalla — under the qui tam provisions of the False Claims Act. The three cardiologists had privileges to practice at Citizens Medical Center at the time the alleged offenses occurred.
They will collectively receive about $6 million from the recoveries, the DOJ said.
Under the False Claims Act, private citizens can sue on behalf of the government for false claims and share in any recovery.
The claims settled last week are allegations only and there has been no determination of liability, the DOJ said.
In 2012, Citizens Medical Center paid the same three cardiologists a total of $8 million in the negotiated settlement of another lawsuit that alleged racketeering, conspiracy, and discrimination. As part of that settlement, they resigned their hospital privileges.
The case is United States ex rel. Parikh, et al. v. Citizens Medical Center, et al., Case No. 6:10-cv-64 (S.D. Tex.).
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.