Physician Law Blog

Summer’s almost here and the weather is heating up for HEAT, the Department of Justice’s (DOJ) task force to combat healthcare fraud. This whistleblower initiated action was brought to the attention of the government by a former pharmacist employed by PharMerica. The settlement announced today relates to allegations of dispensing Schedule II controlled drugs without a valid prescription resulting in violation of the False Claims Act for submitting false claims to Medicare for the improperly dispensed drugs.

The OIG has made it clear that laboratory payments to referring physicians are suspect as another False Claims Act (FCA) settlement was announced. The $48.5M settlement involves Health Diagnostics Laboratory, Inc. (HDL) and Singulex Inc. and resolves allegations they violated the FCA by paying remuneration to physicians in exchange for patient referrals and billing federal health care programs for medically unnecessary testing. Allegedly HDL and Singulex induced physicians to refer patients to them for blood tests by paying them processing and handling fees between $10 and $17 per referral and routinely waiving patient co-pays and deductibles.

Hospitals and physicians need to be alert when entering management agreements to ensure that the relationships require sufficient bonafide services to justify those management agreements. In this latest case, allegations related to violations of Stark Statute and Anti-Kickback Statute led to significant penalty payments, Ten Million Dollars. Hospitals and physicians need to ensure that any management service agreements they enter do not violate the Stark Statute and/or Anti-Kickback Statute.