SZD Health Law Scan : Health Care Lawyers & Attorneys : Schottenstein Zox & Dunn Law Firm : Strategic Planning, Managed Care, Insurance : Columbus, Cleveland, Cincinnati, Central Ohio

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On August 25, 2009, the Department of Justice announced Covenant Medical Center in Waterloo, Iowa agreed to pay the United States $4.5 million to resolve allegations that it violated the False Claims Act. The settlement resolves allegations that Covenant submitted false claims to Medicare by having financial relationships with five physicians that violated the Stark Law. The government alleged that Covenant violated the Stark Law by paying commercially unreasonable compensation, far above market value, to five employed physicians. According to the government, these physicians were among the highest paid hospital-employed physicians not just in Iowa, but in the entire United States.

Covenant issued a press release denying any wrongdoing or illegal conduct. Covenant maintained the physician compensation was consistent with the approved compensation plan, was based on work personally performed by the physicians, and reflected their exceptionally high level or productivity. Covenant said it made a business decision to settle to avoid the uncertainty of litigation, disruption, and high expense associated with protracted litigation with the government. 

An article in the Des Moines Register on May 26, 2005 provides some information about the compensation. The paper reported that Covenant paid one orthopedic surgeon more than $2.1 million and a second orthopedic surgeon more than $1 million. A gastroenterologist was paid nearly $2.1 million. These figures were for the budget year ending in June 2003. 

DOJ's press release is here www.justice.gov/opa/pr/2009/August/09-civ-849.html