The Department of Justice is doubling down on Stark law violations, with CMS settling a record-breaking total of $12.6 million in Stark law in 2023, a 552% increase from 2021.
Compensation above fair market value, compensation structures that changed with referrals, and the provision of services to physicians at reduced or no cost are some of the violations the DOJ is doubling down on.
Here are five of the health systems that are facing Stark law violations in 2024:
1. In July, the Justice Department filed a legal complaint against two medical centers for Stark law violations that led to physician compensation that exceeded fair market value and submitting false Medicare claims.
The complaint — filed against Murphy (N.C.) Medical Center, doing business as Erlanger Western Carolina Hospital, and Chattanooga-Hamilton County (Tenn.) Hospital Authority, doing business as Erlanger Health System and Medical Center — alleges that Erlanger employed and received referrals from physicians that did not meet any Stark law exceptions. Chattanooga-Hamilton County Hospital Authority runs Erlanger Health System.
The complaint alleges the violations led to physicians being compensated in excess of fair market value and the health system "relaxed or eliminated physician compensation oversight and controls in order to recruit and retain physicians with valuable downstream revenue."
2. In May, Pittsburgh-based Penn Highlands Healthcare and several of its hospitals agreed to pay $735,000 to resolve False Claims Act and Stark law infringement allegations.
Penn Highlands DuBois allegedly violated the Stark law from July 1, 2009, through June 30, 2012, by paying improper compensation to medical providers. Gary Ott, MD, and another physician at Dr. Ott's practice were paid $420,000 under a consulting agreement for employment services allegedly performed before the agreement went into effect, during which time neither physician was employed by Penn Highlands DuBois.
3. In May, Pittsburgh-based UPMC agreed to pay $38 million to settle a whistleblower lawsuit alleging neurosurgeons employed by the health system submitted false claims. The suit was filed against the health system and 13 staff neurosurgeons in 2012 by former UPMC neurosurgeon William Bookwalter, MD, neurophysiologist Robert Sclabassi, MD, PhD, and surgical technologist Anna Mitina.
The suit alleged some neurosurgeons submitted claims for purportedly assisting with procedures performed by other surgeons or residents, even though they did not assist nor supervise. Additionally, one neurosurgeon allegedly submitted fraudulent claims to Medicare for levels of spinal decompression not performed. The allegations also resolved claims neurosurgeons were paid excessive compensation and surgeons referred procedures and surgeries to UPMC in violation of Stark law.
4. In March, NewYork-Presbyterian/Brooklyn Medical Methodist Hospital in New York City agreed to pay $17.3 million to resolve allegations that it paid unlawful kickbacks to physicians.
The hospital allegedly made payments to physicians at the hospital's chemotherapy infusion center, where physician compensation was linked to the number of referrals made for services at the center, according to a March 12 news release from the Justice Department.
5. The Justice Department filed a complaint against financially troubled Dallas-based Steward Health Care System alleging violations of the physician self-referral law and submission of false claims to Medicare. The complaint claims that between January 2013 and March 2022, Steward Medical Group overpaid Arvind Agnihotri, MD, chief of cardiac surgery at Steward St. Elizabeth's Medical Center in Boston, in relation to fair market value and linked the compensation to the volume or value of his referrals to the hospital.
The government also alleges that the medical group paid Dr. Agnihotri nearly $5 million in incentive pay tied to the number of cases Dr. Agnihotri referred to the hospital, among other allegations.