Hospitals, Physicians Can Take Some ‘stark' Lessons From Covenant Case

By Author: Jaun Paul
Total Articles: 53
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Recently, Covenant Medical Center in Waterloo, Iowa agreed to fork over a huge $4.5 million to settle a federal False Claims Act lawsuit involving alleged Stark Law violations. The case in point teaches some lessons to hospitals and physicians trying to survive a growing government crackdown on fraud and abuse.


According to the US government, Covenant submitted false claims to Medicare because it had overpaid five employed physicians who referred patients to the hospital for services - a verboten practice under the physician self-referral Stark law. The Department of Justice (DOJ), in a news release announcing the settlement agreement, noted that the Covenant physicians featured among the best paid hospital-employed physicians not just in Iowa, but throughout the country.


As far as the fates of the physicians are concerned, the DOJ does not anticipate any sanctions ...
... being brought against them. But that doesn't mean that the government couldn't impose a civil or criminal penalty against both the hospital in Stark cases.


According to legal experts, the Covenant case sounds a warning bell for two key reasons - First, the government targeted employment relationships, which it typically hasn't done under Stark or as kickbacks. Second, a dissatisfied competitor of Covenant reportedly enthused the legal trouble for the not-for-profit medical center. Attorney William Mathias says that based on the background he's heard, the competitor saw that Covenant's IRS form showed Covenant was giving its physicians a much better deal than the competitor was giving its physicians.


He also predicts that there will be more and more of this type of activity on the part of competing providers.

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