Infirmary Health Pays $24.5 mill to Settle Suit

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Mobile based Infirmary Health System Inc., two IHS-affiliated clinics and Diagnostic Physicians Group P.C. agreed to pay the United States $24.5 million to settle a lawsuit alleging that they violated the False Claims Act by paying or receiving financial inducements in connection with claims to the Medicare program, according to the U.S. Justice Department.

“Financial arrangements that compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patients’ needs,” said Assistant Attorney General for the Civil Division Stuart F. Delery. “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs.”

According to the Department of Justice, the government’s suit alleged that two IHS affiliated clinics — IMC-Diagnostic and Medical Clinic, in Mobile, and IMC-Northside Clinic, in Saraland, Alabama — had agreements with DPG to pay the group a percentage of Medicare payments for tests and procedures referred by DPG physicians, in violation of the Physician Self-Referral Law (commonly known as the Stark Law) and the Anti-Kickback Statute. Also named in the lawsuit was Infirmary Medical Clinics P.C., an affiliate of IHS that directly owns and operates approximately 30 clinics in the Mobile area, including the two clinics involved in this lawsuit.

The lawsuit was originally filed by Dr. Christian Heesch, a physician formerly employed by DPG, under the whistleblower provisions of the False Claims Act. Those provisions authorize private parties to sue on behalf of the United States and to receive a portion of any recovery. The act permits the United States to intervene and take over the lawsuit, as it did in this case with respect to some of Dr. Heesch’s allegations. Dr. Heesch will receive $4.41 million as his share of the settlement.

“Today’s settlement represents a single but significant step towards achieving integrity in the administration of public health programs in this region,” said U.S. Attorney Kenyen Brown for the Southern District of Alabama. “Physicians, physician groups and other medical entities operating illegally within public health programs will be held accountable. I also commend whistle blowers like Dr. Christian Heesch, who helped bring this particular case to light.”

For its part, Infirmary Health said its clinics did not admit fraud or any improper conduct as part of the settlement. There were no allegations of any patient care issues associated with the complaints.

Infirmary Health CEO, Mark Nix issued a statement saying in part, “This agreement to settle these claims represents our strong desire to move past litigation about what has been a very complex issue and allow us to end this distraction so that we can focus on our mission and purpose as a community healthcare provider.  Earlier this year, Infirmary Health and Infirmary Medical Clinics were dismissed from this lawsuit as well as a separate but related lawsuit filed by a former system physician. This settlement will allow us to avoid additional expenses of defense and the distractions associated with litigation.”

Nix continued,“Our intent has always been to comply with the very complex and extremely technical Stark Law. This complaint resulted from what has been a disagreement with the government over our interpretation of the law as written.”

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