In January 2024, Methodist Le Bonheur Healthcare and Methodist Healthcare-Memphis Hospitals reached a settlement, agreeing to pay $7.25 million to resolve allegations of False Claims Act violations.
Two qui tam whistleblowers were responsible for the lawsuit. They alleged that the hospitals engaged in Medicare fraud by offering kickbacks to physicians.
Suspicious affiliation agreements
The government’s investigation revealed that the hospitals had affiliations with the West Clinic and the University of Tennessee Health Science Center. These affiliations included the following agreements:
- Asset purchases
- Management services
- Leased employee and administrative services
- Professional services
The hospitals used these situations to provide kickbacks to the West Clinic. In so doing, they influenced referrals of Medicare beneficiaries.
Legal perspectives
U.S. Attorney Henry C. Leventis emphasized that federal law prohibits financial incentives from influencing a doctor’s referral decisions. This law ensures that patient welfare remains the primary focus. He asserted that the hospitals’ affiliations with the West Clinic violated this law. He also warned that any medical center offering similar kickbacks should expect enforcement actions.
Whistleblowers and qui tam provisions
The settlement originated with two qui tam whistleblowers. Jeffrey Liebman, a former president of Methodist University Hospital, and David Stern, a former Dean of the University of Tennessee Health Science Center, were the ones to report the wrongdoing. Qui tam provisions of the False Claims Act empower citizens to file lawsuits on behalf of the government when they know about fraud. Whistleblowers can be eligible for 15% to 30% of the government’s recovery.
The announcement of this settlement coincides with the introduction of the False Claims Amendments Act of 2023. The proposed amendments address loopholes that have hindered the effectiveness of the FCA. Many whistleblower advocates support this bill.