Two recent cases demonstrate the consequences of hospital-physician financial relationships that do not comply with Stark.
The first involved a qui tam case against Rush University Medical Center in Chicago. A former Rush employee and a member of Rush’s medical staff blew the whistle on certain medical office leases, calling into question various rent concessions, lack of documentation, and the failure to collect rent from the physician-tenants in a timely and consistent manner, all in violation of Stark. The United States Department of Justice intervened, and contended that these failures tainted Rush’s resulting claims to the Medicare and Medicaid programs, and that Rush improperly certified in its cost reports that the services were provided consistent with applicable law, all in violation of the federal False Claims Act. Rush ultimately settled with DOJ for over $1.5 million.
The second case, also a qui tam action, alleged that Tuomey Hospital in Sumter, South Carolina, violated Stark and the False Claims Act when it paid compensation to various physicians that was in excess of fair market value, not commercially reasonable, and tied to the volume or value of referrals. The whistleblower in the Tuomey action was an orthopedic surgeon whom Tuomey tried, unsuccessfully, to hire. Unlike Rush, Tuomey took the case to trial and convinced the jury that it did not submit false claims to the government. Nevertheless, the jury still concluded that Tuomey had violated the Stark statute, which may result in potential liability of up to $45 million. In so doing, the jury apparently rejected a fair market value opinion that Tuomey had obtained in support of the compensation paid to the physicians.