Whistleblower reports illegal hospital billing: False Claims Act, Stark law violations: Qui tam: Settlement

Law Reporter, Dec 2004

United States ex rel. Barbera, v. Tenet Healthcare Corp., U.S. Dist. Ct., S.D. Fla., No. 97-6590-CIV-Jordan/Brown, Mar. 25, 2004.

Barbera was the CEO of Tenet Physician Services and was responsible for managing Tenet's physician practices in Florida. He reported to his superiors that he felt one of Tenet's hospitals had improperly entered into statutorily prohibited financial relationships with several physicians and had overbilled Medicare for referrals from these doctors in order to induce the doctors to refer patients to the hospital. After reporting the alleged violations to his employer, Barbera was terminated. He is now a vice president of another health care company, overseeing operations at some of its hospitals.

Barbera sued Tenet under the Federal False Claims Act, 31 U.S.C. §§ 3729 to 3733, which provides that a whistleblower who reasonably believes fraud has been committed may tell the government and file suit against the offender on behalf of the government. The government then investigated and intervened in the case. Suit also alleged violations of the Stark law, 42 U.S.C. § 1395nn-which prohibits physicians from referring Medicare patients to medical facilities with which they have a financial relationship-and the Anti-Kickback Act, 41 U.S.C. §§51 et seq., which prohibits payments or remuneration to any person in return for the referral of patients covered under a federal health care program.

Defendant contended that the compensation agreements were acceptable given the competition to acquire physician practices in the geographic area and its desire to establish an integrated delivery system to compete for managed care business. Defendant argued that this competition is what caused the compensation to doctors to increase.

The parties settled before trial for $22.5 million, including about $5.18 million, plus attorney fees and costs, to Barbera as allowed by the whistleblower protection provisions of the False Claims Act.

Plaintiff's expert was R. James Alerding, accounting, Indianapolis, Ind.

Defendant's experts were Richard A. Pollack, accounting, Miami, Fla.; and Nathan Kaufman, healthcare strategy, San Diego, Cal.

Plaintiff's Counsel

*Gary E. Sherman, Fort Lauderdale, Fla.

United States's Counsel

David Wiseman, Washington, D.C.

David Coheii, Washington, D.C.

Ana Martinez, Miami, Fla.