© 2015 The Texas Lawbook.
By Natalie Posgate
(April 22) – A South Texas hospital has agreed to end a lawsuit with the U.S. Department Justice by paying a $23.5 million settlement to the government and the three whistleblowers who brought the litigation several years ago.
Within 10 days, Victoria-based Citizens Medical Center must pay $21.75 million to the DOJ and nearly $6 million to the three cardiologist whistleblowers, who claimed in 2010 that the hospital violated the False Claims Act by compensating several cardiologists in excess of the fair market value of their services and illegally paid bonuses to emergency room physicians for their referrals to the hospital.
The second allegation violates the Stark Act, which restricts the financial relationships hospitals can have with doctors who refer patients to them.
Josh Romero, a partner in Jackson Walker’s Austin office, said the case is significant because it is aligned with the national surge in False Claims Act litigation.
“The federal government in particular is really amping up in this area in terms of prosecuting fraudulent conduct,” said Romero, who represented the three whistleblowers with fellow Jackson Walker partner, Monte James. “It’s consistent with that effort to weed out fraudulent Medicare and Medicaid billing.”
Houston attorney Gary Eiland of King & Spalding and Victoria attorney Kevin Cullen, who represented CMC in the litigation, could not be reached for comment.
The DOJ’s legal team consisted of Assistant United States Attorney Jose Vela of the Southern District of Texas and senior trial counsel David Cohen of the commercial litigation branch of the DOJ.
In a statement, the DOJ said the settlement marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which joined forces in 2009 in an effort to reduce and prevent Medicare and Medicaid financial fraud.
“The settlement announced today represents the effectiveness of our continuing efforts and an example of our priorities in this arena,” said U.S. Attorney Kenneth Magdison of the Southern District of Texas.
Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division added that the DOJ has “longstanding concerns about improper financial relationships between health care providers and their referral sources, because those relationships can alter a physician’s judgment about the patient’s true health care needs and drive up health care costs for everybody.”
Since its inception in 2009, the HEAT initiative has recovered more than $24 billion through False Claims Act cases, more than $15 billion of which involved fraud cases against health care programs.
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