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The Department of Justice (DOJ) today announced that Infirmary Health Systems Inc. (IHS) of Alabama, two affiliated clinics and a physician group practice agreed to pay $24.5 million to settle allegations of False Claims Act, Stark Law and anti-kickback violations.

A former physician employee of the group practice initiated the lawsuit by filing a qui tam whistleblower complaint, and will receive $4.41 million as his share of the settlement.  DOJ intervened in the case and alleged that the clinics and the physician group, Diagnostic Physicians Group P.C. (DPG), violated the Stark law and the federal anti-kickback statute by agreeing to the payment of a percentage of Medicare revenues for tests and procedures referred DPG’s physicians. In addition to the payments, the health system, clinics and physician group agreed to the terms of a Corporate Integrity Agreement requiring them to implement compliance measures and submit federal health care program claims to independent review for five years. DOJ’s press release is available at http://www.justice.gov/opa/pr/2014/July/14-civ-759.html.

This settlement provides another reminder of the need to carefully structure financial compensation arrangements between physicians and healthcare providers, suppliers and manufacturers.  For more information, please see our Alert, available at http://www.mcdonaldhopkins.com/alerts/healthcare-under-fire-physicians-compensation-arrangements

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