The DOJ announced that the government has filed a False Claims Act (FCA) complaint against Erlanger Health System. Defendant Chattanooga-Hamilton County Hospital Authority, doing business as Erlanger Medical Center and Erlanger Health System, operates several hospitals in Tennessee. Chattanooga-Hamilton County Hospital is the sole member of Defendant Murphy Medical Center, Inc., which is part of Erlanger Health System (collectively “Erlanger”). The government alleges that Erlanger violated the FCA by submitting claims for hospital services that were referred by physicians they had financial relationships in violation of the Stark Law.
The Stark Law was established to protect against unnecessary treatment and physician referrals incentivized by financial gain. In 2005, Erlanger previously paid $40 million to resolve allegations of violating the FCA, which were allegedly predicated on violations of the Stark Law. Per the 2005 settlement agreement, Erlanger entered into a Corporate Integrity Agreement (CIA) to ensure their practices aligned with the Stark Law. The CIA ended in 2010 and, according to the complaint, Erlanger quickly implemented a new strategy to increase profits in 2013.
Between 2014 and 2021, Erlanger allegedly paid its physicians in surplus of the fair market value to secure their referrals. The government further alleges that the foregoing relationship did not satisfy the requirements of any applicable Stark Law exception. It is also alleged that Erlanger’s Chief Executive Officer signed contracts before their compliance team was able to review. Alana Sullivan and J. Britton Tabor, Erlanger’s former Chief Compliance Officer and Chief Financial Officer, initiated this matter under the qui tam provisions of the FCA.
Upon announcing the FCA complaint, Principal Deputy Assistant Attorney General Brian M. Boynton, commented that “[t]he [DOJ] is committed to ensuring that physicians’ treatment decisions are based on the needs of their patients and not their own financial interests.” Special Agent in Charge Tamala E. Miles of the Department of Health and Human Services Office of Inspector General further commented that “[t] his complaint serves as a warning to health care entities that attempt to increase profits through improper financial arrangements with referring physicians[…]”.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection to False Claims Act investigations and litigation. If you need assistance with such a matter, please contact us today.