Hospital Pays $8.5 Million to Settle Kickback Allegations

Memorial Hospital, an Ohio nonprofit corporation that operates an acute care hospital in Fremont, Ohio, has agreed to pay $8.5 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute by engaging in improper financial relationships with referring physicians.


“Improper financial relationships between health care providers and their referral sources can undermine physicians' judgment about patients' true health care needs and drive up health care costs for everyone,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. "The Justice Department is firmly committed to recovering the taxpayer dollars lost due to these arrangements and making sure that all health care providers follow the rules.”


The Anti-Kickback Statute and the Stark Statute restrict the financial relationships that hospitals may have with doctors who refer patients to them. The settlement involved allegations that financial relationships that Memorial had with two physicians – a joint venture between Memorial and a pain management physician and an arrangement under which an ophthalmologist purchased intraocular lenses and then resold them to Memorial at inflated prices - violated statutory requirements. These issues were disclosed to the government by Memorial.


“The price of such arrangements can be very costly to the nation’s health care system, taxpayers and provider organizations,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson. “So, we are pleased that Memorial stepped forward to disclose these improper financial relationships and is working to avoid future occurrences.”


The improper referrals at issue in this matter included Medicaid patients. Medicaid is funded jointly by the states and the federal government. The State of Ohio, which paid for some of the Medicaid claims at issue, will receive $600,383 of the settlement amount.


See the DOJ Announcement