U.S. v. Rogan — Sep. 2006 (Summary)

FALSE CLAIMS ACT

U.S. v. Rogan
No. 1:02-cv-03310 (N.D.Ill. Sept. 29, 2006)

The United States District Court for the Northern District of Illinois ordered the former CEO of a hospital to pay fines in the amount of $64,259,032 for his part in a scheme to file false claims with the government. The government claimed that the CEO individually, and in a conspiracy with several physicians, violated the False Claims Act (“FCA”) by presenting Medicare and Medicaid claims for patients who were referred to the hospital illegally. The CEO purchased the hospital and then used a complex scheme of financial entities to conceal his ownership interest. As part of this scheme, he created a partnership for the purpose of operating the hospital, whose management fees were based upon the hospital’s net patient-service revenue. In order to increase hospital admissions, and thereby increase his own profits through his management partnership, the CEO entered into various sham contracts with physicians in exchange for referrals.

At trial, the CEO argued that he was unaware of the various sham contracts entered into with the physicians, and alleged the Vice President of Medical Staff Development acted independently and without his knowledge. However, the district court disagreed, finding that the evidence overwhelmingly showed the CEO knowingly entered into the contracts that violated the Stark and anti-kickback statutes and knowingly caused the hospital to submit false claims to the government. Therefore, the CEO was ordered to pay treble damages, as well as civil penalties because of his calculated and egregious behavior.