DMC to Pay $30M to Settle False Claims, Kickback Charges

Detroit Medical Center will pay $30 million to settle self-disclosed allegations that it paid illegal kickbacks to referring physicians, the U.S. Justice Department announced Thursday.

The settlement with the federal government came one day before DMC, the massive, eight-hospital, safety-net health system, planned to finalize its $1.5 billion sale to Nashville-based Vanguard Health Systems, the for-profit hospital chain. Vanguard also signed the settlement, DOJ said.

"There was no suggestion that anyone from DMC ever intentionally billed anything incorrectly or ever paid a doctor to influence referrals. We did not," DMC President/CEO Mike Duggan said in a letter to employees. "But many of our processes and recordkeeping were sloppy, particularly in the earlier years, and the feds take that very seriously. Most of those problems are already cleaned up and the balance is being corrected right now. We're starting the New Year under Vanguard with a clean bill of health."

Federal prosecutors said in a media release that most of the improper relationships identified in the investigation involved violations of the False Claims Act, the Anti-Kickback Statute and the Stark Statute and centered around office lease agreements and independent contractor relationships that were either inconsistent with fair market value or not recorded in writing.