Former hospital system president, board member expose alleged kickback scheme; feds seek to recover hundreds of millions of dollars
A former president and a board member at a major Tennessee health system have exposed an alleged kickback scheme, and federal investigators are now seeking to recover hundreds of millions of dollars.
The case involves Methodist Le Bonheur Healthcare and Methodist Healthcare Memphis Hospitals, which allegedly paid unlawful kickbacks to West Clinic P.C. in exchange for West’s patient referrals, federal investigators said on April 11, 2022.
The case shows just how significant a problem alleged kickbacks are in the U.S. healthcare system, said Scott Williams, CEO of Ethic Alliance.
“Kickback schemes strike right at the heart of the integrity of our healthcare system, namely the patient’s trust in their doctors and belief that the doctor is choosing a course and place of treatment based on how to best treat the patient’s condition, not where the physician is receiving the greatest financial windfall,” said Williams.
Ethic Alliance is a for-profit corporation and law firm whose purpose is to empower, educate and protect whistleblowers, ensuring they receive the protection they need and the rewards they are entitled to under US law (the US government will typically reward whistleblowers 10%-30% of the amount recovered or sanctioned under various whistleblower laws), generating profits for investors while reducing corruption, fraud, theft, lying and cheating in our society.
Ethic Alliance protects whistleblowers through a secure, encrypted reporting and messaging platform, attaching the strong legal protection of attorney-client privilege from the moment a report is filed with us, and access to a network of specialty attorneys that have made careers protecting and supporting whistleblowers, and working with the US government to win whistleblower lawsuits.
The Methodist case started in 2017 when Jeffrey H. Liebman, the former president of Methodist University Hospital, filed a whistleblower lawsuit. The qui tam, or whistleblower, provisions of the False Claims Act allows private citizens with knowledge of false claims to bring civil suits on behalf of the government and to share in any recovery.
In December 2019, David M. Stern, M.D., the former executive dean and vice chancellor at the University of Tennessee Health Sciences Center, who served on the board of directors of Methodist Le Bonheur Healthcare from 2011 to 2017, joined Liebman’s lawsuit. Stern was also a member of the Executive Cancer Council and the Steering Committee for the West Cancer Center.
In response to a Liebman and Stern’s lawsuit , the U.S. government began investigating the alleged wrongdoing. On April 11, 2022, the U.S. government formally intervened in the case, alleging violations of the False Claims Act and the Anti-Kickback Statute.
In sum, the feds charge, Methodist knowingly agreed to pay West Clinic millions of dollars in kickbacks for the revenues Methodist expected to, and ultimately did, realize from West’s referrals. The arrangement lasted from January 1, 2012, through December 31, 2018, “and continued even after Methodist knew that the United States was investigating these allegations following the filing of the whistleblowers’ lawsuit,” the feds say.
The kickbacks that Methodist allegedly paid were disguised through a sophisticated business integration wherein Methodist purchased substantially all of the outpatient locations of the largest oncology practice in the Memphis area, owned by West, federal investigators charge.
“As a result of the transaction,” the feds charge, “Methodist, which prior to the deal had no outpatient cancer treatment, was able to establish a new stream of income in the reimbursements for outpatient treatment that previously went to West. Methodist also realized a huge increase in referrals for inpatient services from West, which previously referred the bulk of its patients to Methodist’s competitors, including Baptist Memorial Hospital.”
The alleged wrongdoing is being investigated by the Department of Health and Human Services, Office of Inspector General.
The claims in which the United States has intervened are allegations only, and there has been no determination of liability.
Contact Ethic Alliance at info@ethicalliance.com
Photo by Alexander Mils on Unsplash