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Proving the theory that no good deed goes unpunished, according to a March 17, 2008 Department of Justice press release, Hardeman County Memorial Hospital in Texas agreed to pay the federal government a total of $398,230 to resolve allegations that it violated the federal False Claims Act by submitting improper claims for payment to the Medicare program for healthcare items and services that were provided as a result of improper physician referrals. Interestingly, the case was based on a 2005 self-disclosure by Hardeman to the Office of Inspector General of the Department of Health and Human Services that Hardeman had discovered a physician lease arrangement pursuant to which a referring physician had received free rent from Hardeman. The self-disclosure triggered an investigation which concluded in the settlement and Hardeman's entry into a 3-year Corporate Integrity Agreement.

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Under a recent decision by the U.S. Court of Appeals for the 11th Circuit, a case brought by a group of physicians against a PPO discount card company and a managed care company for appropriation of the doctors’ names and identities in connection with a plan to market and sell medical discount cards will be permitted to proceed in court. Specifically, the plaintiff physicians have alleged that Private Health Care Systems allowed the Capella Group, Inc. to access the PHCS network including the discounts negotiated with the physicians in the network, as well as their names, professional identities and practice information in order to sell Capella’s medical discount cards.

The physicians allege that PHCS gave Capella access to their information without the physicians’ consent. Originally the federal district court dismissed the complaint, holding that the doctors’ sole remedy was on the contract they entered into with PHCS. However, the Court of Appeals found the district court’s decision to be contrary to Georgia law and reversed the decision, clearing the way for the case to proceed to court on its merits.

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As previously reported on this blog, the Centers for Medicare and Medicaid Services (CMS) had announced in 2007 that they intended to send requests for information to all Medicare participating hospitals for details regarding the investment/ownership and compensation arrangements between those hospitals and physicians to determine whether the arrangements were in compliance with the federal Stark statute. However, according to an April 10, 2008 notice published by the Office of Management and Budget, CMS has now withdrawn the Request for Information survey with no indication as to whether a new survey will be issued in the future. Of course, physicians who have financial relationships with hospitals should not assume that this issue is dead and gone but rather should take this opportunity to review their existing hospital relationships to ensure compliance with the Stark statute and regulations.

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