Ohio Hospital Operator Agrees to Pay United States $14.25 Million to Settle Alleged False Claims Act Violations Arising From Improper Payments to Physicians

Mercy Health, a nonprofit organization based in Cincinnati that operates healthcare facilities in Ohio and Kentucky, has agreed to pay the United States $14,250,000 to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department announced yesterday.

The settlement resolved allegations that Mercy Health provided compensation to six employed physicians – one oncologist and five internal medicine physicians – that exceeded the fair market value of their services.  Federal law restricts the financial relationships that hospitals may have with doctors who refer patients to them.  These issues were self-disclosed to the government by Mercy Health.

“When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services and higher health care costs,” said Acting Assistant Attorney Chad A. Readler, head of the Justice Department’s Civil Division.  “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

“Hospitals should employ their physicians at a compensation level that is consistent with fair market value for the area of practice, and should not attempt to incentivize physicians to refer patients based on anything other than the best clinical interests of the patient,” said First Assistant United States Attorney Vipal Patel for the Southern District of Ohio.

The case was handled by the Justice Department’s Civil Division, the United States Attorney’s Office for the Southern District of Ohio, the Office of Inspector General of the Department of Health and Human Services, and the Centers for Medicare and Medicaid Services. The claims settled by this agreement are allegations only, and there has been no determination of liability.