Steward Health Care System Settles False Claims Act Violations

Steward Health Care System has reached a $4.7 million settlement to resolve allegations that it violated the False Claims Act by paying physicians for services they did not provide.

The United States and the Commonwealth of Massachusetts investigated the allegations after three whistleblowers filed a False Claims Act complaint in the US District Court for the District of Massachusetts in 2018. The whistleblowers will receive 17 percent of the settlement amount.

Steward Health Care System is one of the country’s largest private for-profit healthcare networks. The system owns multiple hospitals in Massachusetts, including for-profit hospital Steward Good Samaritan Medical Center, Inc. (GSMC) in Brockton.

The complaint alleged that GSMC formed an agreement with Brockton Urology Clinic in 2011 directing the clinic to establish a Prostate Cancer Center of Excellence at GSMC. However, Steward admitted that GSMC did not have a Prostate Cancer Center of Excellence as of January 2012, and Brockton Urology did not provide the services included in the agreement.

Despite not offering the required services, GSMC allegedly paid Brockton Urology according to the agreement from April 2011 through December 2017. In return, Brockton Urology referred patients to GSMC, the settlement noted.

According to the US Department of Justice (DOJ), the US reached a settlement agreement with Brockton Urology in February 2022, in which the clinic agreed to pay $100,000 to resolve the False Claims Act violations.

GSMC entered into agreements with other physician practices as well. One arrangement required a physician practice to provide a physician to serve as the director of GSMC’s Prostate Cancer Program. But the practice never offered a physician, nor did it perform any of the services specified in the agreement, Steward admitted.

Regardless, Steward paid the physician practice from April 2011 through December 2015, with the practice referring patients to GSMC.

Additionally, Steward entered into a compensation agreement with a physician in October 2010 in which the physician agreed to serve as GSMC’s medical director of post-acute care services. According to the settlement, Steward paid the physician from November 2010 to June 2016 despite not knowing if the physician performed the services. The physician referred patients to GSMC during this time.

Finally, Steward charged physicians, physician organizations, and non-physician organizations improper rent, leading some entities to pay rent below the fair market value. The health system stated that it leased property to these physicians and organizations between January 2010 and October 2015 and that these entities were referral sources for its Massachusetts hospitals.

“Financial and referral arrangements between hospitals and physician practices that violate federal healthcare laws undermine the integrity of crucial medical decision-making,” Phillip M. Coyne, special agent in charge of the HHS Office of Inspector General, said in the press release. “This settlement is an example of the government’s combined efforts to protect Federal healthcare programs and their beneficiaries from those who are alleged to have violated these laws.”

In addition to paying $4.7 million to resolve the False Claims Act violation allegations, GSMC has entered into a Corporate Integrity Agreement with the HHS Office of Inspector General (OIG). Under this agreement, an independent review organization will conduct an annual review of GSMC’s financial arrangements for compliance with the Anti-Kickback Statute and the Stark Law for five years.

Steward had publicly denied the allegations, but the health system acknowledged and accepted responsibility for the government’s findings in the signed settlement agreement.

“This case is about fraud, waste, and abuse by Steward at the expense of the American taxpayers,” United States Attorney Rachael S. Rollins stated in the press release. “When hospitals like Steward violate the law, we will work tirelessly to recover from them taxpayer money in order to ensure that Medicare and Medicaid funds are going to treat patients instead of supporting fraud.”