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Alabama health system, doctors group settle whistleblower kickback case for $24.5M


An Alabama health system and a physicians group have reached a $24.5 million settlement of a whistleblower lawsuit, in which they were charged with violating the False Claims Act by paying or receiving kickbacks in connection with claims to the Medicare program, the Department of Justice said Monday.

The DOJ’s lawsuit charged that two clinics affiliated with Mobile, Alabama-based Infirmary Health System Inc. had agreements with Mobile, Alabama-based Diagnostic Physicians Group P.C. to pay the group a percentage of Medicare payments for tests and procedures referred by its physicians, in violation of the Physician Self-Referral Statute — or Stark Law — and the Anti-Kickback Statute.

The Department said these laws are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives. The Anti-Kickback Statue prohibits offering paying, soliciting or receiving remuneration to induce referrals or items or services covered by federal healthcare programs including Medicare. The Stark Law forbids hospitals or clinics from billing Medicare for certain services referred by physicians who have financial relationship with the entity.

Whistleblower Dr. Christian Heesch, a physician formerly employed by Diagnostic Physicians Group, who originally filed the lawsuit under the whistle-blower provisions of the False Claims Act, will receive $4.41 million as his share of the settlement, the DOJ said.

“Today’s settlement represents a single but significant step towards achieving integrity in the administration of public health programs in this region,” said U.S. Attorney Kenyan Brown for the Southern District of Alabama, in Mobile, in a statement. “Physicians, physician groups and other medical entities operating illegally within public health programs will be held accountable. I also commend whistle blowers like Dr. Christian Heesch, who helped bring this particular case to light.”

Infirmary Health CEO Mark Nix said in a statement, “Every day our doctors, nurses and employees work to provide the highest quality of care to the 800,000 patients we treat each year. This agreement to settle these claims represents our strong desire to move past litigation about what has been a very complex issue and allow us to end this distraction so that we can focus on our mission and purpose as a community healthcare provider.

“Earlier this year, Infirmary Health and Infirmary Medical Clinics were dismissed from this lawsuit as well as a separate but related lawsuit filed by a former system physician. This settlement will allow us to avoid additional expenses of defense and the distractions associated with litigation. Our intent has always been to comply with the very complex and extremely technical Stark Law. This complaint resulted from what has been a disagreement with the government over our interpretation of the law as written.”

“It is very important to note that this suit focused solely on highly complicated contracts with physicians. Our patients received all of the medical services ordered by their physicians and those services were billed at the appropriate rates.

“Our mission statement is L.I.F.E., defined as Leadership, Integrity, Family and Excellent Service. Today, with this matter behind us, we can focus on what means the most to us: providing superior quality care for our patients.”

Attorneys for Diagnostic Physicians Group could not be reached for comment.

In February, long-term care pharmacy firm Omnicare, based in Cincinnati, agreed to pay the government $4.2 million to settle charges in a whistleblower suit that it engaged in a kickback scheme with a drug manufacturer in violation of the False Claims Act, the DOJ said.

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