DOJ: Cleveland Clinic-owned Akron General Health System agrees to $21.3M fraud, kickbacks settlement

File folders labeled "insurance," "fraud," "claims," and "under investigation"
A long-sealed whistleblower case brought by Akron General Health System's former director of internal audit alleged "numerous" violations from 2010 to 2016. The Cleveland Clinic had purchased the Ohio system in late 2015 and voluntarily disclosed its own concerns to the Department of Justice following the acquisition. (Getty Images/Olivier Le Moal)

Akron General Health System, an Ohio-based regional hospital system owned by the Cleveland Clinic, has agreed to pay roughly $21.3 million to resolve false claims and kickback allegations, the Department of Justice (DOJ) announced late last week.

The payout is tied to a whistleblower case brought by the system’s former director of internal audit, Beverly Brouse, in late 2015.

In the initial complaint, Brouse alleged that AGHS had paid doctors above the market rate in exchange for patient referrals and had submitted “numerous” fraudulent claims for reimbursement—a violation of the Anti-Kickback Statute, the Physician Self-Referral Law and the False Claims Act.

These violations were alleged to take place between August 2010 and March 2016, according to the DOJ.

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AGHS was acquired by the Cleveland Clinic at the end of 2015 and, according to the DOJ, “voluntarily disclosed to the government its concerns with these compensation arrangements, which were put in place by AGHS’s prior leadership, and received credit for its cooperation in the resolution reached by the parties.”

“Improper payments to physicians for referrals threaten the integrity of our health care system and deprive patients of the independent medical decision-making that they deserve,” acting Assistant Attorney General Brian Boynton of the DOJ’s Civil Division said in a statement. “The [DOJ] is committed to upholding these important interests and to pursuing providers who engage in improper financial arrangements.”

Brouse said she had raised the issue with the AGHS’ Compliance and Internal Audit Committee in 2015 and was subsequently terminated by the system that December after its acquisition by the Cleveland Clinic. In the initial complaint, Brouse alleged that the firing “was in retaliation for her efforts to report and remedy the violations of the Federal False Claims Act.”

The parties agreed to the settlement in May of this year, according to Brouse’s legal representation. Under the whistleblower provisions of the False Claims Act, she will receive a percentage of the $21.3 million settlement.

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“I raised in good faith issues regarding arrangements that AGHS had with certain physician groups,” Brouse said in a statement. “Those arrangements are discussed in the settlement agreement reached with the [DOJ]. I also had concerns about my termination from AGHS. I am pleased that DOJ, Akron General and I were able to resolve these matters.”

Healthcare comprises the vast majority of cases pursued by the DOJ under the False Claims Act. During 2020’s fiscal year alone, $1.8 billion of the $2.2 billion recovered by the department under the False Claims Act involved healthcare fraud and false claims.

During that same year, $1.6 billion of the total settlements arose from lawsuits filed under the act’s whistleblower provisions. Those individuals received a collective payout of $309 million during fiscal year 2020.