Dallas Hospital Fined $7.5M for Kickback Scheme

Pine Creek Medical Center's alleged enticements in exchange for physician referrals included magazine, radio, television, and pay-per-click ads, billboards, website upgrades, brochures, and business cards.

A Dallas-based, physician-owned hospital will pay $7.5 million to resolve whistleblower claims that it violated the False Claims Act by providing marketing services for physicians in exchange for surgical referrals, the Department of Justice announced.

Federal prosecutors said that Pine Creek Medical Center ran an illegal kickback scheme between 2009 and 2014 that would pay for marketing and advertising services for physicians. In return, the physicians would refer their patients, including Medicare and TRICARE beneficiaries, to Pine Creek.

HealthLeaders Media's request for comment from Pine Creek officials was not answered.

Among other things, Pine Creek allegedly paid for advertisements on behalf of the physicians in a number of local and regional publications. Pine Creek also allegedly paid for radio and television advertising, pay-per-click advertising campaigns, billboards, website upgrades, brochures, and business cards, as well as other forms of marketing to induce physicians to refer patients to Pine Creek for medical services.

"Healthcare providers that attempt to profit from illegal kickbacks will be held accountable," Principal U.S. Deputy Assistant Attorney General Chad A. Readler said in a media release. "Improper financial incentives can distort medical decision making and drive up healthcare costs for federal health care programs and their beneficiaries." 

Pine Creek will enter into a corporate integrity agreement with the Department of Health and Human Services Office of Inspector General, which requires the hospital to take up internal compliance reforms for the next five years.

"Hospitals that try to boost their profits by paying kickbacks to physicians will instead pay for their improper conduct," said Special Agent in Charge C.J. Porter, with OIG's Dallas Region. "We will continue to investigate such illegal business arrangements that undermine impartial medical judgment."

Whistleblowers Suzanne Scott and Savannah Sogar, former employees of Pine Creek’s marketing department, will receive more than $1.1 million from the settlement.