/>i30 July 2024. Recently, the U.S. government has intervened in a whistleblower’s lawsuit against Erlanger Health System, alleging violations of the Stark Law. The whistleblower lawsuit was filed in the U.S. District Court for the Western District of North against Murphy Medical Center, Inc. (Erlanger Western Carolina Hospital) and Chattanooga-Hamilton County Hospital Authority (Erlanger Health System). The government claims that Erlanger violated the Stark Law by maintaining improper financial relationships with several physicians. These violations allegedly resulted in false claims being submitted to Medicare from 2014 through at least 2021. If the case is successful, the whistleblower could take home between 15-25% of the government’s recovery from the medical center system.
The Allegations Against Erlanger
The government’s complaint against Erlanger alleges that the health system had compensation arrangements with physicians that significantly exceeded fair market value. These arrangements did not meet any Stark Law exceptions, rendering the subsequent Medicare claims ineligible for payment. Such compensation arrangements allegedly created incentives for physicians to refer patients to Erlanger, regardless of whether it is in the best interest of the patient. Because these financial relationships did not comply with Stark Law requirements, any referrals made by these physicians to Erlanger are considered unlawful.
What is the Stark Law?
The Stark Law, also known as the physician self-referral law, prohibits physicians from referring patients to entities with which they have a financial relationship for certain designated health services reimbursed by Medicare. The law aims to prevent conflicts of interest that could compromise patient care and lead to unnecessary medical services. By prohibiting self-referrals, the law seeks to create a more ethical healthcare environment where patient well-being is the primary concern.
Exceptions to the Stark Law
Financial relationships under the Stark Law include ownership, investment interests, and compensation arrangements. There are exceptions to the Stark Law, such as bona fide employment relationships, certain rental agreements, and physician recruitment arrangements. However, these exceptions come with strict requirements that must be met to ensure compliance.
Government Intervention
When the government intervenes in an FCA lawsuit, it indicates a strong belief in the validity of the allegations. Government intervention can lead to more substantial resources being devoted to the case, increasing the likelihood of a successful outcome.
Penalties and Consequences
Violations of the FCA can result in significant penalties, including treble damages and fines. Healthcare entities found guilty of submitting false claims may also face exclusion from federal healthcare programs.
The Role of the False Claims Act
The False Claims Act (FCA) allows individuals to file lawsuits on behalf of the government against entities that submit fraudulent claims for government funds. In this case, the whistleblower has utilized the qui tam provision of the FCA to bring Erlanger’s alleged Stark Law violations to light.
Whistleblower Protections
The FCA provides protections and potential financial rewards for whistleblowers who expose fraud against the government. These provisions encourage individuals to come forward with information about illegal activities without fear of retaliation.
Whistleblowers bring fraud schemes such as these Stark Law violations to light and wrongdoers to justice. As the U.S. Attorney for the Western District of North Carolina said about the case, “We are dedicated to enforcing the Stark Law and protecting patients and the Medicare program from financial relationships that undermine public trust and incentivize overbilling and waste of taxpayer dollars.”
