The complaint claims that Erlanger's employment relationships with several physicians failed to meet any Stark Law exceptions because the compensation paid to these physicians was significantly above fair market value.
The United States has lodged a complaint against Murphy Medical Center, Inc., operating as Erlanger Western Carolina Hospital, and Chattanooga-Hamilton County Hospital Authority, operating as Erlanger Health System and Erlanger Medical Center, collectively known as Erlanger, in the U.S. District Court for the Western District of North Carolina. The government accuses Erlanger, a healthcare system based in Tennessee and North Carolina, of violating the Stark Law, thereby submitting false claims to the Medicare program.
The Stark Law prohibits hospitals from billing Medicare for services referred by physicians with whom the hospital has an improper financial relationship that does not meet any statutory or regulatory exception.
The complaint claims that Erlanger's employment relationships with several physicians failed to meet any Stark Law exceptions because the compensation paid to these physicians was significantly above fair market value. Consequently, Erlanger allegedly received referrals from these physicians in violation of the Stark Law and knowingly submitted ineligible claims for payment to Medicare.
“Improper financial relationships between hospitals and physicians threaten the integrity of clinical decision-making and can influence the type and amount of health care that is provided to patients,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division.
“The government’s complaint alleges that Erlanger compromised Stark Law compliance to boost its financial standing, knowingly overpaying physicians whose practices generated profits for the hospital,” said U.S. Attorney Dena J. King for the Western District of North Carolina. “We are dedicated to enforcing the Stark Law and protecting patients and the Medicare program from financial relationships that undermine public trust and incentivize overbilling and waste of taxpayer dollars.”
The United States has intervened in a lawsuit initially filed under the qui tam, or whistleblower, provisions of the False Claims Act. This law allows private individuals to sue on behalf of the U.S. government for false claims and potentially receive a portion of any recovered funds. The False Claims Act permits the government to take over such lawsuits, as it has partially done in this case. Violators of the Act face the possibility of treble damages and additional penalties.
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