Hospitals Retain Physician Practices in Order to Secure Patient Referrals

In recent months, the number of Stark-predicted False Claims Act qui tam recoveries has skyrocketed, returning hundreds of millions of dollars to the United States Treasury. While the general awareness of this legal theory has garnered much attention from the hospital industry and should-be whistleblowers, the scope of the underlying problem has remained largely unexplored.

History will show that a significant percentage of America’s hospitals have entered into inappropriate financial relationships with their employed physicians. Violations of the Stark Statute come into play when hospitals compensate physicians based, in part, on the number of Medicare and Medicaid patients that they refer, or will refer, to the hospitals for inpatient and ancillary services.

These improper arrangements are typically evidenced by the hospitals’ substantial and consistent losses on their employed physician practice groups. The hospitals will tolerate such losses because they are able to recover the losses, plus additional sums, by ensuring that these physicians refer their patients to the hospitals for all inpatient and ancillary services.

More information for whistleblowers is located at the Nolan Auerbach & White website.