Health Care Company and Hospital Pay $3.85M on Referral Kickback Claims

St. James Healthcare (St. James), a hospital located in Butte, Montana, and its parent company, Sisters of Charity of Leavenworth Health System (Sisters of Charity), a health care organization based in Denver, Colorado, have agreed to pay $3.85 million to resolve allegations that they violated the Anti-Kickback Statute, the Stark Law and the False Claims Act by improperly providing financial benefits to physicians and physician groups that made referrals to the hospital.


The Anti-Kickback Statute prohibits the provision of remuneration with the intent to induce referrals of government health care program business. The Stark Law restricts financial relationships that hospitals may enter into with physicians who refer patients to them. Federal law prohibits payment by federal health care programs of medical claims that result from arrangements that violate the Anti-Kickback Statute or the Stark Law.


“Improper financial arrangements between hospitals and physicians not only undermine the integrity of the decisions that doctors make, they raise the cost of health care for all of us,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “The department has longstanding concerns about such conduct and is committed to working with health care providers that come forward to disclose their misconduct.”


The settlement announced today resolves allegations that St. James and Sisters of Charity provided various improper financial incentives to physicians and physician groups that were involved in a joint venture with St. James to own and operate a medical office building on the St. James campus. These incentives included a payment to the joint venture that increased the share values for the physicians and physician groups in the joint venture and resulted in below fair market value lease rates for the physicians renting space in the medical office building.


Additional incentives provided by St. James and Sisters of Charity included below fair market value lease rates for the land upon which the medical office building was constructed and other below fair market value arrangements related to shared facilities, use and maintenance. These issues were disclosed by St. James and Sisters of Charity to the government.


“This matter is of great significance to Montanans because it helps ensure federal health care programs deliver services in a cost-effective and efficient manner,” said U.S. Attorney for the District of Montana Michael W. Cotter. “We are encouraged that hospitals like St. James Healthcare are taking these issues seriously by reviewing their operations and making disclosures to the government where necessary.”


See the DOJ Announcement