Operator Of Hospitals In Queens, NY, Agrees To Pay $4 Million To Settle Alleged False Claims Act Violations Arising From Improper Payments To Physicians

BROOKLYN, N.Y. – MediSys Health Network, Inc., which owns and operates Jamaica Hospital Medical Center and Flushing Hospital Medical Center, two hospitals in Queens, New York, has agreed to pay $4 million to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Department of Justice announced today.   

The settlement was announced by Bridget M. Rohde, Acting U.S. Attorney for the Eastern District of New York, Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division, and Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), New York Region.

The government’s investigation revealed that defendants submitted false claims to the Medicare Program for services rendered to patients referred by physicians with whom defendants had improper financial relationships.  These relationships took the form of compensation and office lease arrangements that did not comply with the requirements of the Stark Law, which restricts the financial relationships that hospitals may have with doctors who refer patients to them.  The allegations were brought to the government’s attention through the filing of a complaint pursuant to the qui tam provisions of the False Claims Act.  Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. 

“Health care providers who enter into improper financial relations with referring physicians compromise the referral process and encourage over-utilization of services, to the potential detriment of both patients and taxpayers.  We will hold health care providers accountable for their violations of federal law,” stated Acting U.S. Attorney Rohde.  Ms. Rohde thanked DOJ’s Civil Division and HHS-OIG for their assistance in the investigation.

“This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers,” said Acting Assistant Attorney General Readler of the Justice Department’s Civil Division.

“When hospital operators provide financial incentives to doctors for patient referrals, individuals rightfully wonder whose best interests are being served,” said HHS-OIG Special Agent-in-Charge Lampert. “We will continue to investigate such entities who fraudulently bill government health programs.”  

The United States’ case was handled by Assistant U.S. Attorney Kenneth M. Abell of the United States Attorney’s Office for the Eastern District of New York, with assistance from Senior Trial Counsel David T. Cohen from DOJ’s Civil Division’s Commercial Litigation Branch and Associate Counsel David Fuchs from HHS-OIG.