Pine Creek Medical Center to pay $7.5M to settle physician kickback allegations

justice scales and gavel
The hospital paid for marketing services for physicians in exchange for surgical referrals, the Department of Justice said. (Getty/BrianAJackson)

A Dallas-area hospital has agreed to pay $7.5 million to resolve kickback claims.

The Department of Justice announced that Pine Creek Medical Center, an 18-bed physician-owned hospital, agreed to the settlement to resolve allegations that it violated the False Claims Act by paying kickbacks to physicians in exchange for surgical referrals. 

Between 2009 and 2014, Pine Creek paid for advertisements in local and regional publications, billboards, radio and television and spent money on upgrades including to its websites, brochures and business cards to encourage physicians to refer patients to the hospital for surgery, according to DOJ. Referred patients included Medicare and Tricare beneficiaries.

As part of the settlement, Pine Creek will enter into an agreement with the Department of Health and Human Services Office of Inspector General to make "substantial" compliance improvements over the next five years, according to the announcement.

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The allegations were first revealed in a whistleblower lawsuit filed by two former members of the hospital's marketing department, which federal authorities later joined, according to DOJ. The whistleblowers will receive more than $1.1 million in the settlement.

"Healthcare providers that attempt to profit from illegal kickbacks will be held accountable," Principal Deputy Assistant Attorney General Chad A. Readler, who heads DOJ's Civil Divison, said in the announcement. "Improper financial incentives can distort medical decision-making and drive up healthcare costs for federal healthcare programs and their beneficiaries." 

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The Trump administration has made combating healthcare fraud a priority.

The emphasis was evident in its budget proposals, which slashed funding to agencies like the National Institutes of Health but increased allocations to the Health Care Fraud and Abuse Control program.