Kickbacks and Consequences

Last fall, a kickback scandal rocked Forest Park Medical Center in greater Dallas. Between bribes and kickbacks, it is believed that $40 million changed hands among 21 physicians, surgeons, and hospital executives. The medical center is likely going to pay a steep cost even if it settles, and each of the defendants could face up to five years in prison and a $250,000 fine.

While breaking laws isn’t exactly a new phenomenon, the willingness to risk all of the sacrifice required to become a physician or high-level executive is baffling. Sometimes the motive is nothing more than hubris, but other times the reasons can run much deeper. For example:

  • In 2015, my colleague Mike Fleischman and I spoke to a state healthcare organization. During one break, an attendee admitted to texting their organization’s attorney to ask “What is the Stark Law?” While that is frightening enough, it turns out that this person’s Critical Access Hospital was using a local real estate attorney as its legal counsel. A person with this training certainly could understand this law, but if health policy law isn’t in your organization’s arsenal, the risk of unwittingly running afoul of regulations and incurring crippling penalties increases exponentially. “We don’t know we shouldn’t be doing it” is never a satisfactory answer when the OIG comes calling.
  • Hospitals will bend the rules when they are scared of losing coverage. When a physician wants to be employed by a hospital, they may sell their current practice to the hospital. While a doctor may think they’re worth $2 million, that’s almost never the case without ancillary services present. Hospitals are supposed to pay fair market value, but often pay more – sometimes double – so they don’t lose coverage for certain services. This can sometimes result from not having a proper valuation of the practice, leading to double payment for purchasing the practice and employment compensation. And stepping outside of these laws for retention purposes can have compounding effects. Every claim issued under a physician in an improper relationship is subject to penalty.

Whether you’re concerned about what could happen or what has happened, Stroudwater can help you navigate anti-kickback legislation and its impact on your organization. The work we do costs peanuts relative to what you could pay for a single infraction – even if you settle.

Opal Greenway is a Senior Consultant at Stroudwater. Contact her at 208-241-7238.