Beaumont Hospital agrees to pay $84.5M for anti-kickback violations

A Detroit-area health system agreed to pay $84.5 million to settle accusations that it made improper payments to referring physicians.

The Justice Department announced that Beaumont Health agreed to settle the allegations that its William Beaumont Hospital ran afoul of the anti-kickback statute between 2004 and 2012. That law bars hospitals from paying or receiving payments to induce referrals for services covered under the Medicaid or Medicare programs. Officials also alleged the health system broke the physician's self-referral law, or the Stark Law, which blocks hospitals from billing Medicare for certain services referred by physicians with whom the hospital has an improper financial arrangement.

In all, the health system will pay $82.74 million to the federal government and $1.76 million to the state of Michigan. 

"This result should impress on the medical community the fact that we will aggressively take action to recover monies wrongfully billed to Medicare, through the remedies provided in the federal False Claims Act,” said U.S. Attorney Matthew Schneider for the Eastern District of Michigan in a statement.

RELATED: HHS reviewing reforms to the Anti-Kickback Statute in addition to Stark Law

The justice department said it had not yet determined the whistleblower shares to be awarded in the cases. 

Investigators said Beaumont paid doctors far in excess of fair market value and gave free or below-fair-market-value office space to physicians to secure their referrals. It said those hospitals then submitted claims for services provided to these illegally referred patients. The settlement also resolves a claim against the health system that it misrepresented a CT radiology center as an outpatient department. The allegations were raised as the result of four whistleblower lawsuits. 

RELATED: Practice News Roundup—Beaumont Health in rift with physician group

“The resolution of these matters, some of which go back to contracts originating 14 years ago, reflects Beaumont Health’s commitment to the future of healthcare in Southeastern Michigan," Beaumont Health President and Chief Executive Officer John Fox said in a statement. "Since the formation of Beaumont Health in 2014, the new management team has implemented additional compliance and legal review processes to ensure our effective compliance with the complex regulations applicable to health systems and to provide additional assurance that these types of issues do not arise again."

As part of the settlement, Beaumont also entered into a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General, which will include independent reviews.

Schneider also praised "new leadership" at Beaumont Hospital, which he said made "things right once its past wrongdoing was brought to its attention."