Intermountain Health System Agrees to $25.5 Million Settlement in Stark Violation Case

Intermountain Healthcare, the largest health system in Utah, has agreed to pay $25.5 million to resolve claims that it violated the federal Stark law and False Claims Act by engaging in inappropriate financial relationships with referring physicians.

In 2009, Intermountain disclosed to federal officials that the system may have illegally paid bonuses to 37 doctors based on their patient referrals. If true, Intermountain would have been in violation of the Stark law. In addition, Intermountain disclosed that it compensated more than 170 doctors in the absence of written agreements, including via rentals of office space in several cities without written lease agreements. In total 209 physicians were involved in the violations, which spanned over a 10 year period.

Intermountain discovered the violations through its regular review process, and reported them to the government in 2009. Intermountain cites the complexities of the Stark law’s regulations as one cause of its noncompliance. According to Intermountain’s Chief Medical Officer Dr. Wallace, Intermountain should have more closely monitored the situation and although Intermountain’s management realized that penalties could be significant, they chose to self-disclose the issues.

Intermountain’s self-disclosures ultimately led to a $25.5 million settlement agreement, which is one of the largest recent healthcare settlements with the Department of Justice. Freeman Health System of Joplin, Missouri entered into a similar settlement agreement with the Department of Justice last November for $9.3 million. Notably, Intermountain has not admitted to any wrongdoing in the settlement agreement nor has there been determination of liability on the part of Intermountain or the physicians involved.

The partnership between the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative and the Department of Justice has led to intensive efforts to prevent and reduce Medicare and Medicaid fraud. As illustrated by these recent settlements, the False Claims Act has proven to be a very effective tool for the government, and has resulted in recoveries in excess of $14.2 billion since the partnership began in 2009.

If you need assistance determining how the Stark law and False Claims Act may affect your practice or how to set up a regular review process, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.