False Claims Act Kickback Settlement for $29 Million

VHS of Michigan Inc., also known as The Detroit Medical Center Inc. (DMC), Vanguard Health Systems Inc. (Vanguard), and Tenet Healthcare Corporation (Tenet), have agreed to pay over $29 million to the government to resolve allegations that they violated the False Claims Act by engaging in kickback schemes with referring physicians.

DMC, which operates prominent hospitals in the Detroit area such as Sinai Grace Hospital and Harper University Hospital. In 2013, Tenet acquired Vanguard and its hospitals and outpatient facilities, including DMC. The government accused DMC, Vanguard, and Tenet of submitting false or fraudulent claims to Medicare by virtue of engaging in a fair market value kickback scheme

The specific allegations revolve around the period between January 2014 and December 2017, during which Sinai Grace Hospital and Harper University Hospital allegedly provided the services of DMC-employed mid-level practitioners to 13 physicians either at no cost or below fair market value, in exchange for patient referrals. These actions violated the Anti-Kickback Statute (AKS) since some of the patient censuses were Medicare and Medicaid patients. The government asserted that the physicians who received mid-level practitioners were chosen based on their high number of patient referrals to the two hospitals, with the aim of encouraging them to continue to refer and even refer more Medicare patients to DMC facilities.

The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare and other federally funded programs. The intent is to ensure that medical providers prioritize patient care and make decisions based on their best interests, rather than being influenced by improper financial incentives.

The civil settlement also includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act. The whistleblower will receive $5,205,211.37 as part of the settlement as a whistleblower reward. The qui tam case is titled U.S. ex rel. Meythaler v. Detroit Medical Center, Inc., et al., No. 5:15-cv-12333 (E.D. Mich.).