Can a hospital violate the Stark Statute and the
Anti-kickback statute, and therefore the False Claims Act, when it provides free
parking to physicians in return for Medicare patient referrals? According to the Middle District of Florida,
such a “financial relationship” between a hospital and a physician may result
in the imposition of liability under the Stark Statute, the Anti-kickback
statute, and the False Claims Act.
The Stark
Statute prohibits physicians from referring Medicare patients to a hospital if
they have certain “financial relationships” with that hospital, and it also prohibits
that hospital from making Medicare-reimbursement claims for services it
provides to those patients. A financial
relationship exists between a physician and a hospital where the physician receives
compensation based on the volume or value of referrals brought to the hospital.
Further, in addition to the STARK
violation, the Anti-kickback statute (“AKS”) makes it a felony for a hospital
to knowingly and willfully offer compensation to induce a physician to refer a patient
for medical services that are paid through “a Federal health care program.”
Under the
False Claims Act (“FCA”), a hospital is held liable if it knowingly presents a
fraudulent claim for payment or “knowingly makes, uses, or causes to be made or
used, a false record or statement material to a . . . fraudulent claim.” Since compliance with both statutes is
required for Medicare payments, a violation of either STARK or AKS is
sufficient for liability under the FCA.
The primary
issue here was whether the claimed “financial relationship” between BayCare and
the referring physicians was sufficient to withstand a motion to dismiss. BayCare
owned St. Anthony’s Hospital, land attached to the Hospital that was leased to
St. Pete MOB to build a medical office building, and a second medical office
building that was leased to SC Physicians. To generate more referrals to St. Anthony’s
Hospital, BayCare created an easement permitting St. Pete MOB’s referring
physicians to park in the hospital’s parking garage. The lease also allowed “referring physicians,
their staff and patients, to use Baycare’s [sic] parking facilities at no
charge,” which created more than $10,000 in savings per year for each referring
physician. Similarly, both St. Pete MOB’s and SC
Physicians’ referring physicians were provided with complimentary valet
services. Further, BayCare applied its
tax exemptions for non-exempt property to both medical offices to encourage
each office to refer patients. These exemptions provide each company with
hundreds of thousands of dollars in property tax savings.
BayCare
presented claims to Medicare for payment for services rendered on behalf of the
patients that were referred by St. Pete MOB and SC Physicians. To request such payment, BayCare ultimately
maintained that it complied with STARK and AKS by signing the Medicare Provider
Application and Agreement. Supporting
these claims, the complaint provides an aggregate number of Medicare patients both
medical offices referred to St. Anthony’s Hospital from 2009 to 2011.
An
unrelated relator uncovered the financial scheme, and brought it to the
attention of the federal government. The
United States and the relator filed a claim in the Middle District of Florida alleging
that BayCare violated STARK and AKS by using its financial relationship with physicians,
at St. Pete’s and SC Physicians’, to induce Medicare patient referrals and that
BayCare violated the FCA by submitting claims from those referrals to the federal
government. BayCare filled a motion to
dismiss on the grounds the plaintiffs’ complaint did not comply with Rule 9(b)
because it failed to allege a single false claim billed to the government.
The Court held
that the alleged financial relationship between the hospital and the referring
physicians was sufficient to withstand BayCare’s motion to dismiss. The Court reasoned that these fraudulent
claims mainly rely on the improper relationship between the referring
physicians and the hospital rather than particular fraudulent billing
data.
Further, the
Court reasoned that the free parking, valet services, and tax exemptions that
BayCare offered to physicians who referred Medicare patients established a
financial relationship subject to the restrictions under STARK and AKS. Additionally, the Court stated that BayCare’s
signing of the Medicare Provider Application and Agreement, coupled with the
aggregate number of Medicare referrals that the physicians provided to the
hospital, sufficiently displayed its knowledge of submitting fraudulent claims
to Medicare for payment. An allegation complete
with the evidence that BayCare knowingly submitted claims in violation of STARK
and AKS is sufficient to establish liability under the FCA.
Since this
is a District Court case, its precedent is only persuasive for other federal District
Courts. However, it is likely that the
holding here will be affirmed at the appellate level, especially because the value
of the parking benefits and tax exemptions can be considered. All in all, hospitals should refrain from
financially inducing physicians to refer patients that utilize federal
benefits.
Full decision available at: United States v. BayCare Health Sys., 8:14-CV-73-T-23EAJ, 2015 WL
4878456 (M.D. Fla. Aug. 14, 2015).
Tobin Klusty is a current student at DePaul University
College of Law in Chicago. Mr. Klusty has an interest in the intersection of
health care and civil rights, and plans to practice as a litigator after
graduation.