Hospital owes $20M for violating Stark Act

Bradford (Pa.) Regional Medical Center, a 96-bed acute-care hospital, owes $20 million in penalties, plus millions more in False Claims Act damages, according to a press release from Stone Law Firm, LLC, which represented four physician-whistleblowers.

In an opinion issued Nov. 10 by the U.S. District Court for the Western District of Pennsylvania, Judge Maurice Cohill Jr. held that the hospital's relationship with Drs. Peter Vaccaro and Kamran Saleh and their medical practice, V&S Medical Associates, LLC, violated the federal Stark Act, which prohibits hospitals from submitting claims to Medicare based on referrals from physicians with whom the hospital has a financial relationship.

The ruling was part of a whistleblower lawsuit filed under the False Claims Act, which allows people to bring an action on behalf of the government to recover losses due to fraud. In this case, four physicians who were members of the BRMC medical staff, were behind the lawsuit.

"This case is especially important because it targets fraudulent and abusive practices that drive up the cost of healthcare, that we all end up paying for in the form of higher taxes," said Andrew M. Stone, one of the lawyers for the whistleblowers.

According to the documents filed, V&S made thousands of inpatient and outpatient referrals to BRMC, which resulted in several million dollars of Medicare payments.

The lawsuit alleges that a BRMC subleased a nuclear imaging camera from V&S, which the latter used to perform diagnostic tests in-house, rather than refer patients to the hospital, which had its own nuclear camera. As part of the "sublease" agreement, BRMC paid V&S more than $23,000 a month in return for "noncompete" agreements by V&S and the two doctors. The lawsuit contends that the deal wasn't a real sublease of equipment but a masked attempt to pay the doctors for referrals.

Besides the Stark Act claim, the lawsuit contends that the arrangement violated the Anti-Kickback Statute, which makes it unlawful to knowingly and willfully offer or pay any money for referrals of services covered by a federal healthcare program. In his opinion, Judge Cohill said that BRMC will have a hard time proving that it is not liable under the anti-kickback rule.

To learn more:
- read Judge Cohill's opinion and all the details on U.S. et al v. Bradford Regional, et al.
- here's the press release from Stone Law Firm, LLC