Texas Heart Hospital of the Southwest dba Heart Hospital Baylor Plano will pay $48 million to resolve Medicare fraud allegations raised in a whistleblower lawsuit. Two former Heart Hospital doctors filed the complaint.
According to Mitchell Magee and Todd Dewey, Heart Hospital set unreasonably high patient quotas for physician owners, inducing illegal Medicare beneficiary referrals in violation of the Physician Self-Referral Law (aka Stark law) and the Anti-Kickback Statute (AKS). The hospital’s Medicare billings were allegedly tainted by the fraudulent conduct, resulting in violations of the False Claims Act.
Under the Physician Self-Referral Law, doctors cannot refer Medicare beneficiaries to a hospital with which the physician has a financial relationship. The AKS provides that hospitals cannot pay kickbacks to induce referrals from doctors.
Under the False Claims Act (FCA), when any claims for payment submitted to government programs are tainted by these types of violations, they constitute false claims. Individuals with information about FCA violations can be eligible for awards ranging from 15 to 30 percent, depending on certain factors. To qualify for awards, whistleblowers must file an FCA lawsuit.
According to Magee and Dewey, “the Heart Hospital. . . presents the epitome of the concerns expressed by [the government’s warnings about Medicare fraud].” The whistleblowers stated that “the physician-owned specialty cardiac hospital — which primarily serves Medicare patients — has seen exponential growth in the number of procedures and other services performed at the facility. . . Much of that growth has been as a result of Defendants' illegal scheme to ensure referrals to the Heart Hospital from its physician investors by conditioning the ability of those physicians to retain their limited partnership interests, and the lucrative returns from those interests, on having an excessive number of ‘patient contacts’ at the hospital per year and changing the definition of such contacts to only those patient encounters that generate revenue.”
One of the most profitable cardiac surgery hospitals in the country, Heart allegedly relies on referrals by its physician owners to generate revenue. “Ownership in the Heart Hospital was based on the ability to generate referrals,” the whistleblowers wrote. “The term ‘patient contact’ is, therefore, really nothing more than a code word for ‘patient referrals.’”
Magee and Dewey will share a $13.9 million whistleblower award for bringing their claims against the defendant. The government declined to intervene in the lawsuit, but the whistleblowers managed to prevail. Under the FCA, successful tipsters whose claims are not supported by the government can receive a maximum of 30 percent of recoveries. The maximum award in lawsuits joined by the government is 25 percent. Typically, it is easier to win a case when the government joins in as a plaintiff.