Posted on August 30, 2009 by Robert Cochran

Hospital Pays $4.5 Million to Resolve False Claims Allegations

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

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Posted on January 19, 2009 by Robert Cochran

New Government Contractor Disclosure Requirements

Effective December 12, 2008, entities that provide products or services under contracts subject to Federal Acquisition Regulations ("FAR") must make mandatory disclosure of certain overpayments or legal violations.  The new disclosure requirement is the product of recent amendments to FAR to mandate that government contractors make timely disclosure to the government when they have "credible evidence" that a violation of certain federal criminal laws or the civil False Claims Act (FCA) has occurred in connection with a federal contract. 

The new rule has four primary elements:

  • First, it requires all contractors (including commercial items contractors and small businesses) to establish and promote awareness of a Code of Conduct.
  • Second, it requires all contractors to disclose to the Government any “credible evidence” of (i) certain crimes, (ii) a violation of the civil False Claims Act (FCA), or (iii) a significant overpayment by the Government.
  • Third, it provides for suspension or debarment for a contractor’s failure to “timely disclose” those same events if there is "credible evidence" to support a violation – even where the event occurred prior to the effective date of the new rule.
  • Fourth, it mandates that large companies with non-commercial items contracts implement a comprehensive “internal control system.”

The new rule is a major change from the previous policy of voluntary disclosure.  Most health care products and services are provided to beneficiaries under arrangements that are not subject to FAR.  However, entities that have contracts with federal agencies should check to determine whether the new disclosure requirements apply to their business. 

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