South Shore Physicians Hospital Organization to Pay $1.775 Million for Alleged Kickbacks for Patient Referrals

State-Federal Agreement Alleges Defendants Operated Unlawful Grant Program

BOSTON – The South Shore Physician Hospital Organization (SSPHO) in South Weymouth has agreed to pay $1.775 million to settle allegations of operating a recruitment grant program through which it paid kickbacks to its physician members in exchange for patient referrals.  The United States and the Commonwealth will share in this recovery.

Today, in a consent judgment, the South Shore Physician Hospital Organization, Inc. (SSPHO) and its member organizations, South Shore Hospital, Inc. and Physicians Organization of the South Shore, Inc., acknowledged that the SSPHO paid kickbacks in the form of cash grants to doctors who agreed to make referrals to SSPHO providers.  From 2001 to 2010, SSPHO allegedly approved 103 separate recruitment grants to 33 different physician groups as part of this scheme.  The recruitment grant program requested that grant recipients refer patients to participating providers, which included the South Shore Hospital.

“Unlawful patient referral schemes not only limit patient provider choices, but ultimately lead to higher health care costs,” said United States Attorney Carmen Ortiz.  “Our close working relationship with the Commonwealth’s Attorney General’s Office on heathcare fraud matters including this one is a law enforcement partnership which puts patients care first and foremost.”

“Instead of giving patients lower cost options and flexibility in health care services, we allege these defendants looked to increase their referrals through an unlawful kickback operation,” Massachusetts Attorney General Coakley said.  “We are pleased to have worked with our partners in federal law enforcement to ensure that improper incentives do not undermine the integrity of our healthcare system.”

According to the settlement, the defendants made disclosures about the recruitment grant program in 2012 to the Massachusetts Attorney General’s Office, the U.S. Department of Justice and the Office of Inspector General for the U.S. Department of Health and Human Services.  The defendants cooperated fully with this investigation.

As a result of this conduct, SSPHO and its member organizations allegedly caused participating providers who received referrals from grant recipients to submit false claims for payment to the Medicare Program and the Massachusetts Medicaid program (MassHealth), because those claims were made in violation of the federal Anti-Kickback statute, and violated the Massachusetts Consumer Protection Act.

Under the terms of the settlement, SSPHO will pay a total of $1.775 million, including more than $620,000 to the Commonwealth, $310,625 of which will go directly to MassHealth.  The remainder will be paid to the federal government.

This matter was jointly investigated by the U.S. Attorney’s Office for the District of Massachusetts, the U.S. Department of Health and Human Services, Office of Inspector General, and the Massachusetts Attorney General’s Office.  This case was handled by Assistant U.S. Attorney George Henderson III and Assistant Attorneys General Courtney Aladro and Eric Gold of the Health Care Division and Assistant Attorney General Angela Neal of the Medicaid Fraud Division.