Florida Special Hospital District Settles Stark Allegations for $69.5 Million

American Health Lawyers Association

Arthur J. Fried, a Member of the Firm in the Health Care and Life Sciences practice, in the firm’s New York office, authored an American Health Lawyers Association Email Alert titled “Florida Special Hospital District Settles Stark Allegations for $69.5 Million.”

Following is an excerpt:

The U.S. Department of Justice announced on September 15 the settlement of a qui tam action in the amount of $69.5 million with North Broward Hospital District (NBHD), a special taxing district of Florida that operates hospitals and other health care facilities in and around Broward. The action was initiated by Dr. Michael Reilly, a physician on staff at one of the NBHD facilities, who alleged violations of the federal Stark, Anti-Kickback, and False Claims Acts. This case is notable in that it involves claims of excessive compensation to employed physicians.

In his qui tam complaint, Reilly contended that employed physicians, and particularly orthopedic surgeons, cardiologists, and the primary care, hematology/oncology, and orthopedics groups, were compensated at levels that were above fair market value, not commercially reasonable, and based in part on the volume and value of inpatient and outpatient referrals. The complaint alleged that the excessive nature of the compensation and lack of commercial reasonableness was demonstrated by the substantial losses generated by the employed physicians when the profits from such physicians' referrals to NBHD were not considered. The complaint further alleged that physicians were recruited to NBHD with offers of salaries above their prior gross revenue, additional compensation based upon inflated per relative value unit rates, and payments for directorships.