DMC settles federal kickback allegations with $29.7 million payment
The federal government has settled a case involving allegations that two Detroit Medical Center hospitals used improper kickbacks to coax doctors to refer Medicare patients there in 2014-17.
The DMC and its current and former owners did not admit wrongdoing or liability, but agreed to pay $29.7 million to resolve the case, which originated with a whistleblower, a former Wayne State University doctor who gets $5.2 million of the settlement.
The U.S. Department of Justice alleged that the DMC’s Sinai Grace and Harper University hospitals provided 13 hand-picked doctors with free or below-market help from nurse practitioners and physician assistants in exchange for referrals, a violation of the Anti-Kickback Statute. The doctors were chosen, the government said, because they already made significant patient referrals to the hospitals.
DMC cooperated with investigation
The scheme led to improper Medicare billing, the government alleged.
The Anti-Kickback Statute “prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare and other federally funded programs,” the Justice Department said in a news release. The law is meant to ensure that doctors’ “judgments are not compromised by improper financial incentives and are instead based on the best interests of their patients.”
In a statement, the DMC said the "conduct began under Vanguard’s ownership of DMC," adding that "no new leases were executed once Tenet owned these facilities, and DMC denies there was any improper purpose to these arrangements."
"DMC, Vanguard and Tenet admitted no liability in settling the matter. Once we became aware of the allegations, Tenet and DMC fully cooperated with the government throughout its investigation," the statement said. "The matter was resolved fully to avoid the expense and operational distraction. We remain committed to full compliance with all state and federal health care program requirements and providing high quality care to serve our community."
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The settlement will be paid by the DMC; Vanguard Health Systems, which owned DMC until October 2013; and Tenet Healthcare Corp, which acquired the DMC from Vanguard.
Dr. Jay Meythaler, a former employee of Wayne State University Medical School, which is affiliated with the DMC, will receive $5,205,211.37 of the settlement as a whistleblower under the federal False Claims Act.
Similar previous settlement between government and DMC
In 2010, the DMC paid almost the same amount to settle similar allegations.
The DMC then agreed to pay the federal government $30 million to resolve claims that it engaged in improper financial relationships with referring physicians, offering them kickbacks in some cases in the form of cheap rent, sporting event tickets or free promotional materials.
That allegation was resolved as part of the sale to Vanguard and occurred while current Detroit Mayor Mike Duggan was the DMC’s chief executive officer.
Duggan, who told the Free Press at the time these were "technical problems," said he was "embarrassed" by the $30 million price tag.
Contact Randy Essex: ressex@freepress.com
This article originally appeared on Detroit Free Press: DMC settles federal kickback allegations with $29.7 million payment
