Christ Hospital-Health Alliance $108M settlement highlights hospital, doc relationships

The Health Alliance of Greater Cincinnati and former network member The Christ Hospital, a 555-bed acute-care hospital in Mount Auburn, Ohio, have hammered out the terms of a previously announced settlement with the U.S. Department of Justice (DOJ) over what the DOJ describes as a "pay-to-play scheme." The two organizations will pay $108 million, including $23.5 million to whistleblower Dr. Harry Fry, to settle alleged violations of the Anti-Kickback Statute and the False Claims Act involving unlawful payments to physicians in exchange for cardiac patient referrals to The Christ Hospital.

The Christ Hospital "continues to disagree with the government's allegations that the assignment of physicians to our cardiac testing station resulted in the inducement of local cardiologists to refer patients to the hospital," said Susan Croushore, president and CEO. However, the hospital decided to move forward with the settlement rather than risk the "in excess of a billion dollar award that was sought by the government."

Hospitals nationwide can learn a valuable lesson from this settlement, Jack Fernandez, J.D., a partner at Washington, D.C.-based Zuckerman Spaeder LLP and leader of the firm's Health Care Fraud Practice, tells FierceHealthFinance. Over the past few years, many hospitals have had to look for new ways to work with physicians since amendments to the Stark Law increasingly have made hospital/physician joint ventures economically unsound, creating a potential "weak spot" on the compliance front. "Hospitals need now to examine whatever arrangements they have with physicians to ensure that, when they have moved away from the hospital/physician joint ventures into some other arrangement, that the other arrangement is one that is not violative of the Anti-Kickback Statute or otherwise violative of Stark or other state laws."

The intense effort that the federal and state governments are now putting into anti-fraud initiatives suggests that hospitals should implement rigorous compliance programs that are "not just paid lip service," he adds. Hospitals have to be careful "because it is clear that every employee and every physician with a new venture is now a potential qui tam relator," says Fernandez. For example, if a physician is denied privileges at a hospital and is aware of a potentially fraudulent situation, "then all they have to do is file a submission under seal to the government, and the government will investigate it. If it turns out to be a real fraud, the relator is going to get some money, in this case $23.5 million."

The Christ Hospital took the unusual step of choosing not to enter into a corporate integrity agreement with the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services as part of the agreement. In a statement to FierceHealthFinance, the hospital offered this explanation: "The Health Alliance of Cincinnati and The Christ Hospital are not participating in a corporate integrity agreement as part of the written civil settlement agreement with the U.S. Department of Justice. Given that these claims have taken place between 1997 and 2004, The Christ Hospital believes that a corporate integrity agreement is not necessary. The Christ Hospital has a compliance program that meets and exceeds government standards and has provided the program to the federal government."

Still, it is a bold move given that the OIG has retained its ability to exclude Christ Hospital from the Medicare and Medicaid programs, points out Hernandez.

To learn more:
- read the DOJ announcement
- read The Christ Hospital press release
- read this Cincinnati Enquirer article
- read this Business Courier of Cincinnati article