The Stark law settlement announced involving Halifax Hospital Medical Center in Daytona Beach, FL, stemmed from a whistleblower complaint filed by the hospital’s compliance officer and physician services director, who will receive $20.8 million of the $85 million settlement.
Elin Baklid-Kunz reported to the Office of Inspector General and Department of Justice that she found evidence of Medicare billing abuses at Halifax Health, but hospital leaders did nothing in response to her concerns.
An internal report at the hospital found 60% of patients in a sample of chest-pain patients had been admitted inappropriately, according to court filings. Some of the numbers raised red flags, with two surgeons receiving bonuses of more than $1 million each and one neurosurgeon claiming his patient volume quadrupled the national average.
Baklid-Kunz told investigators that she recommended strengthening the compliance department and reimbursing the government for the false claims, but she says hospital leaders refused because such a move would cost the hospital millions of dollars. When one of the hospital’s staff attorneys confirmed that the arrangements violated the Stark law, the compliance officer feared that she would go to jail if someone else blew the whistle, she told investigators. She worried she would be targeted by prosecutors because of her role at the hospital and her advanced training in compliance.
In response to Baklid-Kunz’s report, the government alleged that Halifax knowingly violated the Stark law by executing contracts with six medical oncologists that provided an incentive bonus that improperly included the value of prescription drugs and tests that the oncologists ordered and Halifax billed to Medicare. The government also alleged that Halifax knowingly violated the Stark Law by paying three neurosurgeons more than the fair market value of their work.
In a Nov. 13, 2013, ruling, the U.S. District Court for the Middle District of Florida ruled that Halifax’s contracts with its medical oncologists violated the Stark Law. The case was set for trial on March 3, 2014, on the government’s remaining claims against Halifax when the parties reached the settlement.
As part of the settlement, Halifax also agreed to enter into a Corporate Integrity Agreement with the Office of Inspector General, which obligates Halifax to undertake substantial internal compliance reforms and to submit its federal healthcare program claims to independent review for the next five years.
