U.S. ex rel. Dennis v. Health Mgmt. Assocs. (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Dennis v. Health Mgmt. Assocs., No. 3:09-cv-00484 (M.D. Tenn. Jan. 14, 2013)

In this False Claims Act (“FCA”) case, the United States District Court for the Middle District of Tennessee dismissed all claims against a medical center and its parent corporation.

The medical center operates a hospital, which entered into a recruitment contract with the relator, a physician.  The relator alleged that the recruitment contract was a sham, which concealed violations of Stark and the Antikickback Statute.  He also alleged that the hospital had entered into similar sham contracts with other physicians, through which the hospital sought to induce referrals in exchange for below fair market value rent, higher than fair market value salaries, and the provision of supporting personnel free of charge.  The relator alleged that he was pressured to comply with an annual referral requirement, since the recruitment contract required that he maintain active status at the hospital, which, in turn, required him to make 24 admissions per year.  He also alleged that claims based on improper referrals were submitted to Medicare and Medicaid in violation of the FCA and its state law analog.  The United States and the state declined to intervene in the matter.

The court found that the requirement to maintain active status did not amount to a referral requirement.  Instead, it found that staff categories are merely a mechanism of correlating a physician’s use of the hospital’s facilities with responsibilities.  Therefore, it dismissed the relator’s claims premised on that basis.