HCA Settles Whistleblower Suit Regarding Tennessee Medical Facilities For $16.5 Million

For-profit hospital chain, HCA, Inc., headquartered in Nashville, Tennessee, has agreed to settle a qui tam lawsuit relating to its subsidiaries, Parkridge Medical Center (“Parkridge”) and HCA Physician Services (“Physician Services”). A qui tam action is a whistleblower lawsuit brought by an individual as a “relator” on behalf of the federal government.

The settlement involves the payment by HCA of $16.5 million to the United States and the state of Tennessee to resolve claims by the relator that HCA violated the False Claims Act and the Stark Statute.

The False Claims Act imposes liability on individuals and entities who defraud governmental programs such as Medicare and Medicaid. The Stark Statute is a Federal law that prohibits a physician from referring patients to a medical facility with whom that physician has a financial relationship, unless some exception applies. It also prohibits medical facilities from billing Medicare or Medicaid for a prohibited referral.

The whistleblower’s complaint filed in 2008, alleged that HCA’s subsidiaries, Parkridge and Physician Services, entered into a series of financial transactions with Diagnostic Associates of Chattanooga (“Diagnostic”), a group of physicians. According to the whistleblower, HCA, through its subsidiaries, provided financial benefits to Diagnostic’s members to induce them to refer patients to HCA’s facilities in violation of the Stark Statute. In addition, the complaint alleges that HCA submitted claims to Medicare and Medicaid in violation of the False Claims Act.

The whistleblower will receive 18.5% of the recovery, approximately $3.1 million, as a reward under the qui tam provisions of the False Claims Act.