Kalispell Regional Healthcare System 'strongly disagrees with the allegations' brought forward by a former executive, but is 'relieved to put this issue behind us.'
Montana-based Kalispell Regional Healthcare System and six subsidiaries will pay the federal government $24 million to settle whistleblower allegations that it paid kickbacks to physicians to entice patient referrals, the Department of Justice said.
The government alleges that the False Claims Act and Stark Law violations occurred between 2010 and 2018, and that, among other illicit behavior, KRH paid excessive full-time compensation to more than 60 physician specialists—many of whom worked far less than full-time—as a means of securing referrals.
In addition, six KRH subsidiaries— HealthCenter Northwest LLC, Flathead Physicians Group LLC, Northwest Horizons LLC, Northwest Orthopedics & Sports Medicine LLC, and Applied Health Services Inc.—conspired to pay physicians employed at Kalispell Regional Medical Center to induce referrals to HealthCenter.
The subsidiaries also conspired to charge below fair market value for administrative services provided to HealthCenter, which unduly profited the physician investors at Flathead, who had an ownership stake in HealthCenter, DOJ said.
Under the settlement, KRH will pay $21.2 million, Flathead Physician Group will pay $2.8 million.
"Financial arrangements that improperly compensate physicians who make referrals to a hospital drive up the cost of healthcare services for everyone," Assistant Attorney General Joseph H. Hunt for the Department of Justice's Civil Division said in a media release.
The settlement resolves whistleblower claims brought in two lawsuits filed by Jon Mohatt, a former CFO for KRH's Physicians Network, who will pocket $5.4 million as his share of the recovery in the two consolidated cases.
Kalispell Regional Healthcare issued a statement detailing the settlement, adding that while the health system "continues to strongly disagree with the allegations, we are relieved to put this issue behind us."
"The Board of Trustees carefully considered the ongoing costs and distraction that litigation would impose upon the system, our employees, and the communities we serve," KRH said.
"We believe that a settlement allows our system to put this difficult matter behind us and allows our physicians and employees to move forward and focus on providing the excellent care that our community expects," KRH said.
"During the government’s review, the quality of care our physicians and staff provide was never questioned nor was overutilization an issue."
“While KRH continues to strongly disagree with the allegations, we are relieved to put this issue behind us.”
Kalispell Regional Healthcare System
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
KEY TAKEAWAYS
Feds say KRH provided excessive compensation to physicians to elicit referrals.
Kickback allegations include charging physicians below market value for administrative services.
Physician investors in the alleged scheme socked with $2.8 million penalty.