Hospital pays $500K to settle claims of improper doc relationships

Westerly (R.I.) Hospital has agreed to pay the federal government $500,000 after a federal investigation revealed nine potentially improper hospital-physician arrangements, The Westerly Sun reported.

In November 2010, the Office of Inspector General (OIG) issued subpoenas to Westerly Hospital and Atlantic Medical Group regarding the hospital's relationship with 50 physicians.

The OIG investigation found Gastroenterology Specialists ran Westerly's gastroenterology department in exchange for agreeing not to compete with the hospital, among other improper agreements, the Associated Press noted.

Westerly also failed to document and update lease agreements with 15 doctors and did not keep records of compensation agreements with 34 physician leaders, according to the investigation.

The lawyer who managed Westerly through its receivership period said the hospital's previous administration failed to comply with Stark Law provisions, noted The Westerly Sun.

But in the settlement agreement, neither Westerly nor its new owner Lawrence + Memorial admit any wrongdoing. The sale to Lawrence + Memorial was pending during most of the investigation. L + M had received county Superior Court approval to move forward with its $69 million bid to acquire Westerly back in September 2012.

Intermountain Healthcare in Utah faced a similar fate in April when it agreed to pay $25.5 million to settle allegations that some of its leases and contracts with physicians violated the Stark law and False Claims Act.

For more:
- read the Westerly Sun article
- here's the AP article

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