Steward Health Care System has agreed to settle a whistleblower case alleging kickback payments for patient referrals to its accountable care organization, according to an announcement from the plaintiffs’ legal representation.
The for-profit system will pay roughly $4.7 million to the federal government and the Commonwealth of Massachusetts, which took up the 2018 case on behalf of three whistleblowers who will receive and split approximately $725,000 of the settlement.
“Our healthcare system is meant to function as a dedicated servant to its patients and employees alike,” Gary Azorsky, a partner at Cohen Milstein Sellers & Toll, the firm representing the whistleblowers, said in the announcement. “Settlements such as this one serve to facilitate this important goal.”
Steward did not admit to violations of the False Claims Act that were alleged in the complaint. Federal and state governments also said they will voluntarily dismiss the complaint and are taking no position on Steward’s potential violations.
However, as part of the settlement, the health system disclosed and accepted responsibility for three areas of conduct related to the allegations.
According to the whistleblowers’ law firm, Steward disclosed that it had “failed to charge the proper rent” on the leases of dozens of physicians, physician organizations and non-physician organizations.
The system disclosed that one hospital, Steward Good Samaritan Medical Center, had entered into a compensation arrangement with one doctor “for services that Steward cannot confirm were performed,” according to the announcement. The hospital also made arrangements with two urology centers for specified services that weren’t performed, the firm said.
Alongside the monetary settlement, Steward Good Samaritan Medical Center will enter a corporate integrity agreement with the Office of Inspector General for the Department of Health and Human Services.
"To be clear, the company cooperated fully with the government investigation, in fact, self-reporting two of the three issues raised, and through actions like self-reporting, demonstrated a commitment to the highest standards of compliance and corporate integrity," Steward told The Boston Globe in a statement. "While Steward admits no wrongdoing, expediently putting this matter behind us now allows the company to focus without distraction on delivering accessible, high-quality healthcare to the local communities and patients it serves every day."
Healthcare fraud allegations comprise the majority of False Claims Act settlements and judgments secured by the Department of Justice. More than $5 billion of the total $5.6 billion in False Claims Act recoveries during the government’s fiscal 2021 were tied to healthcare industry cases, the department announced in February.
Dallas-based Steward Health Care System currently operates across nine states and is among the country’s largest accountable care organizations. Its integrated system spans 39 hospitals and 326 practice locations, with more than 6,600 providers and 43,000 employees delivering services to 12.3 million patients annually.