Cardiovascular Specialists, P.C., d/b/a New York Heart Center (NYHC), has agreed to pay the government $1,336,636.98 plus interest to settle allegations that it participated in fraudulent practices in violation of the federal False Claims Act and the Stark Law. The NYHC is a nine physician cardiology practice with offices throughout upstate New York. The United States Department of Justice (USDOJ) alleges that from September 2007 to August 2008, NYHC compensated its physicians in part based on how often they referred their patients to NYHC for nuclear scans and CT scans. “Medical decisions should always be made on the basis on what’s best for the patient’s health, not the physician’s finances. The compensation system in place in this case had the potential to influence medical judgment, which would be unacceptable,” said Special Agent in Charge Thomas O’Donnell of the Department of Health and Human Services Office of Inspector General (HHS-OIG), New York region. Based on its investigation, the USDOJ believes that NYHC adopted this compensation policy even though it knew that the policy could violate the Stark Law and the federal False Claims Act.
The Stark Law prohibits physicians from referring a Medicare or Medicaid patient for certain health services if the physician has a financial relationship with the provider of these services. This law, which first went into effect in 1992, is intended to prevent a physician’s medical judgment from being compromised by improper financial incentives that induce referrals for unnecessary services. The law was specifically drafted with strict liability language, meaning knowledge of the fraud is not required. In addition, medical necessity is not a defense to Stark Law violations and penalties for violating the Stark Law can be severe. They include denial of payment, refund of payment, imposition of a $15,000 per instance of prohibited service and imposition of a $100,000 civil monetary penalty for each arrangement considered to be a circumvention scheme. Stark Law violations can result in False Claims Act liability, which requires the tripling of damages, as well as penalties of up to $11,000 per violation. The government is leading historic efforts to fight against Medicare fraud, and generally, health-care related fraud.
In a USDOJ release, United States Attorney Hartunian said: “Today’s settlement is another example of this office’s commitment to ensure that services paid for by federal health care programs are based on the best interests of patients rather than the financial interests of referring physicians.” The government’s health care fraud prevention and enforcement efforts have recovered nearly $20 billion over the past five years. The government continues to be dedicated in identifying individuals and entities that are abusing the Medicare and Medicaid systems.