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Texas Hospital Group Pays U.S. $27.5 Million to Settle False Claims Act Allegations
Date:10/30/2009

WASHINGTON, Oct. 30 /PRNewswire-USNewswire/ -- A hospital group based in McAllen, Texas, has agreed to pay the United States $27.5 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute between 1999 and 2006, by paying illegal compensation to doctors in order to induce them to refer patients to hospitals within the group, the Justice Department announced today. McAllen Hospitals L.P., d/b/a/ South Texas Health System, is a subsidiary of Universal Health Services Inc., a company based in Pennsylvania that owns hospitals and other health care centers around the country.

The settlement announced today involved allegations that the defendants had entered into financial relationships with several doctors in McAllen in order to induce them to refer patients to the defendants' hospitals. The government alleged that these payments were disguised through a series of sham contracts, including medical directorships and lease agreements. Under the Stark Statute, Medicare providers are prohibited from billing Medicare for referrals from doctors with whom the providers have a financial relationship, unless that relationship falls within certain exceptions.

"Improper financial relationships between health care providers and their referral sources can corrupt a physician's judgment about the patient's true healthcare needs," said Tony West, the Assistant Attorney General for the Department's Civil Division. "In addition to yielding a substantial recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable for patients."

The settlement resolves allegations raised against both the parent and the subsidiary in a qui tam or whistleblower lawsuit filed in 2005 by Bruce Moilan, a former employee of the defendants, United States ex rel. Moilan v. McAllen Hospitals, L.P., et al., Case No. M-05-CV-263 (S.D. Tex.).
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SOURCE U.S. Department of Justice
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