AGHS Will Pay $21.25M to Resolve FCA Violations – Authorized Reader

Cleveland Clinic’s AGHS will settle false claims accusations for more than $21M.

Akron General Health System (AGHS) based in Akron, Ohio, and owned by the Cleveland Clinic, will pay $21.25 million to resolve False Claims Act (FCA) allegations of “improper relationships with certain referring physicians, resulting in the submission of false claims to the Medicare program.”  In 2015, the regional hospital system was acquired by the Cleveland Clinic Foundation (Clinic) through a full member substitution agreement.

The payout is a result of a whistleblower lawsuit brought by the health system’s former director of internal audit, Beverly Brouse, in 2015.  Brouse had raised the issue with the AGHS’ Compliance and Internal Audit Committee that year and was subsequently terminated after its acquisition by the Cleveland Clinic.  In her initial complaint, Brouse alleged that “the firing was in retaliation for her efforts to report and remedy the violations of the Federal False Claims Act.”

AGHS Will Pay $21.25M to Resolve FCA Violations
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“I raised in good faith issues regarding arrangements that AGHS had with certain physician groups,” Brouse said. “Those arrangements are discussed in the settlement agreement reached with the [DOJ].  I also had concerns about my termination from AGHS.  I am pleased that DOJ, Akron General and I were able to resolve these matters.”

The Department of Justice (DOJ) alleged that between August 2010 and March 2016, AGHS violated the Anti-Kickback Statute and the Physician Self-Referral Law, by paying “compensation substantially in excess of fair market value to area physician groups to secure their referrals of patients.”  AGHS then submitted claims for services provided to these illegally referred patients, violating the FCA.  The Anti-Kickback Statute prohibits “offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by federally funded programs.”

The Physician Self-Referral Law (i.e., Stark Law), prohibits a physician’s referral for certain designated healthcare services (DHS) to an entity if the physician (or a member of the physician’s immediate family) has a financial relationship with the entity, unless the referral is protected by one or more exceptions provided in the law.  A care center cannot bill Medicare for services referred by physicians with whom the hospital has an illegal financial arrangement, including “the payment of compensation that exceeds the fair market value of the services actually provided by the physician.”

“Improper payments to physicians for referrals threaten the integrity of our health care system and deprive patients of the independent medical decision making that they deserve,” said Acting Assistant Attorney General Brian M. Boynton of the DOJ’s Civil Division. “The Justice Department is committed to upholding these important interests and to pursuing providers who engage in improper financial arrangements.”

“Medical decisions should be made with a patient’s best interest in mind rather than an illegal financial agreement,” added Acting U.S. Attorney Bridget M. Brennan for the Northern District of Ohio. “This office is committed to taking appropriate action to ensure the integrity of federal healthcare programs.”

Special Agent in Charge Lamont Pugh III of HHS-OIG agreed, stating, “Physicians must make referrals and other medical decisions based on what is best for patients, not to serve profit-boosting business arrangements.  Working closely with our law enforcement partners, we will continue to protect taxpayer-funded federal health care programs as well as patients.”


Northern Ohio Health System Agrees to Pay Over $21 Million to Resolve False Claims Act Allegations for Improper Payments to Referring Physicians

DOJ: Cleveland Clinic-owned Akron General Health System agrees to $21.3M fraud, kickbacks settlement

Physician Self-Referral (Stark) Law

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