Dive Brief:
- The federal government is suing Dallas-based Steward Health Care and its facilities, Steward Medical Group and Boston-based St. Elizabeth's Medical Center, for violating the False Claims Act and a physician self-referral law, according to a Monday announcement.
- The complaint, filed in Massachusetts District Court, alleges Steward Medical Group improperly linked a lead cardiologist's compensation with his referrals, leading the group to award him nearly $5 million in incentive-based pay — and violating physician self-referral rules, known as the Stark Law.
- St. Elizabeth's Medical Center, which employed the cardiologist, is also accused of submitting over 1,000 claims for referred services to Medicare worth tens of millions of dollars, despite knowing the claims were not eligible for payment.
Dive Insight:
In the announcement, acting U.S. attorney for Massachusetts Joshua Levy said that Steward Health took illegal actions to increase cardiac operations at its facilities. Steward is one of the nation’s largest private health systems, with 33 hospitals in its nine-state portfolio.
The complaint alleges that the system ran afoul of the Stark Law and, in turn, the False Claims Act by pairing the chief cardiac surgeon’s compensation with referrals and billing referred patients’ claims to Medicare.
Congress enacted the Stark Law in 1989 to protect Medicare patients from being impacted by their physicians’ financial relationships. The law prohibits hospitals from billing Medicare for services referred by a physician with whom the hospital has an improper compensation relationship, according to the release. It sits alongside the False Claims Act aiming to prevent fraud and improper billing relations in Medicare plans.
“Improper financial arrangements between hospitals and physicians can compromise medical judgment and threaten the integrity of the Medicare program,” said Roberto Coviello, special agent in charge at the HHS’ Office of Inspector General, in a statement.
Steward Health denied wrongdoing in a statement to Healthcare Dive.
“We are extremely disappointed and surprised that the US Attorney in Boston today filed a civil complaint alleging that a single contract that Steward entered into with a single physician violated a complex and highly technical law — the Stark Law — governing physician compensation,” the system said.
A spokesperson said Steward plans to file a motion to dismiss, adding that the lawsuit stems from complaints made by a disgruntled employee five years ago. Steward said the suit does not accuse the health system of submitting claims for “any medical procedures that were unnecessary, not performed, or billed incorrectly.”
The lawsuit is the latest in a series of legal problems for the medical group.
Last year, Steward paid $4.7 million dollars to settle a complaint accusing the system of defrauding Medicare through a referral scheme in which physicians were incentivized to bill for services that were not provided.
This year, vendors have levied complaints against Steward accusing the system of missing or withholding payments.
The aggrieved vendors include a Cincinnati-based nurse staffing firm and Florida-based PalAmerican Security. The nurse staffing firm filed suit this month, seeking nearly $46 million in back payments related to work performed during the COVID-19 pandemic, while the security firm filed in July, alleging Steward failed to pay over $8.2 million for services.
This month, Steward announced it would close a Massachusetts hospital, citing financial troubles.
