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Healthcare

Dallas-Based Steward Health Care System Faces Federal False Claims Complaint

Government prosecutors allege that Steward’s payment of more than $4M to a cardiac surgeon was calculated based on how many surgeries he referred to the Steward-owned hospital.
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Courtesy: iStock

The U.S. Attorney’s Office in Massachusetts claims that Steward Health Care System violated the False Claims Act when it recruited a cardiac surgeon and paid him more if he increased the number of cardiovascular surgeries at one of the health system’s Boston hospitals.

Prompted by a whistleblower, the government alleges that between 2013 and 2022, Steward Medical Group paid the Chief of Cardiac Surgery at St Elizabeth’s Medical Center, Dr. Arvind Agnihotri, an amount that far exceeded fair market value and included an incentive compensation. It also claims that his compensation considered the volume or value of his referrals to the hospital.

Steward Health Care System, which is one of the nation’s largest for-profit health systems, owns both Steward Medical Group and St. Elizabeth’s. Government prosecutors accuse the system of violating the Stark Law, which was created to prevent physicians’ financial relationships from impacting decision-making for Medicare patients. Referrals should be based on what is best for the patient rather than what makes the involved parties the most money. The law prevents the hospital from billing Medicare for services referred by a physician with whom the hospital has an improper financial relationship in an effort to reduce the overutilization of services and increased costs.

The government claims that SMG’s payments to Agnihotri varied with the number of surgeries he referred to SEMC and that the group paid him $4,868,500 in incentives calculated using the number of surgeries he referred to the hospital. The claim says that SEMC submitted more than 1,000 claims to Medicare, knowing the claims for those services violated the Stark law and were not eligible for payment. U.S. Attorneys say Medicare paid tens of millions of dollars to SEMC as a result of the false claims.

“Improper financial arrangements between hospitals and physicians can compromise medical judgment and threaten the integrity of the Medicare program,” said Special Agent in Charge Roberto Coviello of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Working alongside our law enforcement partners, HHS-OIG will continue to thoroughly pursue allegations of Stark Law violations.”

According to the incentives built into the False Claims Act, a whistleblower who reports illegal activity can recover between 15 and 30 percent of any verdict, judgment, or settlement.

Steward Health Care System began by turning around a group of Massachusetts hospitals and is now the largest private for-profit health system in the country, with 33 community hospitals in nine states and 30,000 employees. The company is led by physicians and focuses on value-based care. It also includes dozens of urgent care centers, 107 skilled nursing facilities, and 7,900 beds under management.

Steward did not respond to questions about the federal claim at the time of publication.

Author

Will Maddox

Will Maddox

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Will is the senior writer for D CEO magazine and the editor of D CEO Healthcare. He's written about healthcare…

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