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SC Hospital Pays $17M to Resolve Stark, False Claims Allegations

News  |  By HealthLeaders Media News  
   July 29, 2016

Lexington Medical Center denies whistleblower claim that the hospital provided financial incentives to physicians in exchange for referrals, says the Department of Justice.

Lexington Medical Center in West Columbia, SC, will pay $17 million to resolve whistleblower allegations that it violated the Stark Law and the False Claims Act by providing financial incentives to 28 physicians for improper referrals, the Department of Justice announced Thursday.

Federal prosecutors said the hospital's inflated deals to either buy physician practices or hire 28 physicians violated the Stark Law because they were not commercially reasonable or provided compensation in excess of fair market value. 

"This case demonstrates the United States' commitment to ensuring that doctors who refer Medicare beneficiaries to hospitals for procedures, tests and other health services do so only because they believe the service is in the patient's best interest, and not because the physician stands to gain financially from the referral," Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department's Civil Division, said in a statement.

Lexington Medical Center denied any wrongdoing, but said it agreed to the settlement to avoid costly and expensive litigation. 

"While Lexington Medical Center was prepared to vigorously defend the case and to demonstrate why it believes the compensation paid to Lexington Medical Center employed physicians is in accordance with all laws and regulations, the outcome of this inquiry reflects the challenges hospitals face navigating highly complex employment law regulations for physicians," the hospital said in a statement.

Lexington Medical Center CEO and President Tod Augsburger said he was "pleased to be able to resolve this matter and to commit all our resources to the care we provide patients."

"After cooperating fully with the federal government throughout this entire process, Lexington Medical Center will continue to strengthen our efforts to ensure full compliance by evaluating internal and external processes," Augsburger said.

"We are proud of the relationships we have with our physicians and the outstanding care they provide to our patients every day."

The settlement resolves allegations filed in a lawsuit by David Hammett, MD, a former physician employed by Lexington Medical Center, in federal court in Columbia, SC. The lawsuit was filed under the whistleblower provisions of the False Claims Act, and Hammett will receive approximately $4.5 million of the settlement.

As part of the agreement, Lexington Medical Center, which is owned by the Lexington County Health Services District Inc., will enter into a Corporate Integrity Agreement with the Department of Health and Human Services-Office of the Inspector General that requires Lexington Medical Center to implement measures designed to avoid or promptly detect future conduct similar to that which gave rise to this settlement.


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