$21M Settlement Resolves Healthcare Fraud Accusations for OH System

Akron General Health System (AGHS), a hospital system in Ohio owned by the Cleveland Clinic Foundation, reached a civil settlement and agreed to pay $21 million for allegedly committing healthcare fraud by violating the False Claims Act.

AGHS is accused of unlawfully paying physician groups in excess of market value to secure patient referrals, then submitting Medicare claims for services issued to the illegally referred patients.

Under the Anti-Kickback Statute, paying for referrals as part of a federal healthcare program is illegal. The statute prohibits soliciting, offering, or paying to secure referrals of any services covered by Medicare, Medicaid, and any other federally funded healthcare program.

Additionally, the Physician Self-Referral Law, also known as the Stark Law, “prohibits physicians from referring patients to receive ‘designated health services’ payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies,” according to the Office of Inspector General (OIG).

The acts were allegedly committed between 2010 and 2016. Cleveland Clinic acquired AGHS in 2015 and voluntarily reported concerns to the government about suspicious compensation agreements that had been in place under previous leadership. The clinic received credit during the settlement for its cooperation.

The False Claims Act states that it is illegal to submit Medicare or Medicaid claims that one knows or should know are fraudulent. According to the OIG, filing false claims can incur fines up to three times Medicare’s losses plus $11,000 per false claim filed.

“Physicians must make referrals and other medical decisions based on what is best for patients, not to serve profit-boosting business arrangements,” Lamont Pugh III, Special Agent in Charge of HHS-OIG, said in a public statement.

“Working closely with our law enforcement partners, we will continue to protect taxpayer-funded federal health care programs as well as patients.”

The $21 million settlement was agreed upon by the US Department of Justice (DOJ) Civil Division’s Commercial Litigation Branch and Fraud Section, the US Attorney’s Office for the Northern District of Ohio, the FBI, and HHS-OIG.

“Improper payments to physicians for referrals threaten the integrity of our health care system and deprive patients of the independent medical decision making that they deserve,” Brian M. Boynton, the acting assistant attorney general of the DOJ’s Civil Division, stated publicly.

“The Justice Department is committed to upholding these important interests and to pursuing providers who engage in improper financial arrangements.”

Earlier this year, lawyers predicted that the government would begin to pursue more healthcare fraud cases due to an influx of funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The government will likely prioritize coronavirus-related fraud and closely monitor healthcare organizations as they receive billions in federal aid.

In addition, OIG is conducting regular audits and inspections of telehealth programs that receive support from Medicare and Medicaid to prevent and monitor healthcare fraud as telehealth’s popularity skyrockets.