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St. Francis Agrees to Pay $36.5M to Settle Case Alleging it Paid Kickbacks

July 10, 2023

St. Francis Health System agreed to settle a case brought by whistleblower Daniel Lee, an orthopedic surgeon in Piedmont, South Carolina. According to the DOJ’s press release, St. Francis will pay $36.5 million to resolve the False Claims Act case filed in 2018. The case involved the submission of false claims to Medicare and TRICARE, the healthcare program for the U.S. military.  The whistleblower claimed St. Francis was paying improper kickbacks to doctors in exchange for referrals.

The Hospital Paid Kickbacks for Referrals In Violation of Stark and AKS

The lawsuit alleged that, since 2007, St. Francis violated the Physician Self-Referral Law, also known as the Stark Law, and the Anti-Kickback Statute (AKS).  St. Francis was accused of providing certain orthopedic surgeons with bonus payments based on the value of their referrals to St. Francis hospitals and affiliated facilities.  The physicians’ bonus pool was allegedly funded by revenues generated from referrals for various medical services.

The AKS prohibits hospitals from financially incentivizing physicians to order services, procedures, or tests.  The reason is to protect patients from biased medical judgments and prevent abuses that increase costs for taxpayers. It also ensures fair competition in the healthcare industry by preventing preferential treatment based on financial considerations.

The Whistleblower Moves Forward After Government Declines to Intervene

After the DOJ declined to intervene, the whistleblower pursued the case independently.  As we have explained previously, a whistleblower can be successful when bringing a non-intervened case. In fact, Dr. Lee’s efforts resulted in the largest FCA settlement in South Carolina history in a non-intervened case.  The whistleblower will receive 28% of the settlement amount ($10,220,000) as his reward.

Importance of Whistleblowers

This case highlights the significant impact whistleblowers can have by coming forward in the best interests of patients and taxpayers.

 Medical providers should base health care decisions on what is best for the patient, and not on financial incentives and related schemes. We are grateful the relator brought these allegations forward. Relators are critical to identifying fraud and protecting the integrity of our Medicare system.

– U.S. Attorney Adair F. Boroughs for the District of South Carolina

Whistleblower Law Collaborative

The Whistleblower Law Collaborative LLC, based in Boston, devotes its practice entirely to representing clients nationwide in bringing actions under the federal and state False Claims Acts and other whistleblower programs.  Among the firm’s many successes is the government’s $10 million settlement with BioReference Health, LLC for paying kickbacks in exchange for referrals. If you have knowledge of government fraud, contact us for a confidential consultation.