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Local Blogs Wednesday, June 28th, 2017 at 3:58 pm

LA hospital will pay $42M to settle allegations of improper financial arrangements with physicians

The owners of Pacific Alliance Medical Center, an acute care hospital just north of downtown Los Angeles, have agreed to pay $42 million to settle allegations that they were involved in improper financial relationships with referring physicians, the U.S. Department of Justice announced Wednesday.

PAMC Ltd. and Pacific Alliance Medical Center Inc. agreed to pay the settlement to resolve a lawsuit that alleged the owners of the Chinatown hospital had violated the False Claims Act by submitting bogus claims to the Medicare and Medi-Cal programs. The claims settled by the agreement are allegations only, and the defendants did not admit liability.

In a statement, the medical center said it had established safeguards to ensure the issue does not arise in the future.

“The physicians, nurses and staff at Pacific Alliance Medical Center take pride in the award-winning care we have provided residents of downtown Los Angeles for nearly 150 years. It was important for us to put this matter behind us, without any admission of liability, so we can continue to focus instead on the essential, life-saving work we do in our community every day.”

The new safeguards will “ensure that our marketing policies and practices comply with the law,” the statement says. “We want to reaffirm our unwavering commitment to ethical business practices.”

The settlement, which was finalized this week, calls for PAMC and Pacific Alliance Medical Center to pay $31.9 million to the United States and $10 million to the state of California. The defendants have until July 7 to make the settlement payments.

The agreement resolves allegations brought in a whistleblower lawsuit that the defendants submitted — or caused to be submitted — false claims to Medicare and Medi-Cal for services rendered to patients who had been referred by physicians with whom the defendants had improper financial relationships.

Those relationships took the form of arrangements under which the defendants allegedly paid above-market rates to rent office space in physicians’ offices, and marketing arrangements that allegedly provided undue benefit to physicians’ practices.

The lawsuit alleged that those relationships violated the Anti-Kickback Statute and the Stark Law, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.

“Federal law prohibits improper financial relationships between hospitals that receive federal health care funds and medical professionals — this is to protect the doctor-patient relationship and to ensure the quality of care provided,” said acting U.S. Attorney Sandra R. Brown. “Patients deserve to know their doctors are making health care decisions based solely on medical need and not for any potential financial benefit.”

Paul Chan, who was employed as a manager by one of the defendants, brought the whistleblower suit under the qui tam provisions of the False Claims Act, under which private citizens can file suit on behalf of the United States and share in any recovery. The United States may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action.

Chan will receive more than $9.2 million as his share of the federal recovery.

“This is another example of how the False Claims Act whistleblower provisions can help protect the public,” said acting Assistant Attorney General Chad A. Readler of the DOJ’s Civil Division. “This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers.”

The medical center said that with the allegations resolved, “we look forward to continuing to provide quality, compassionate care to our highly diverse patient population, 95 percent of whom are enrolled in the Medicare and Medi-Cal programs.”

—City News Service

LA hospital will pay $42M to settle allegations of improper financial arrangements with physicians was last modified: June 28th, 2017 by Debbie L. Sklar

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