Cookeville Hospital Settles False Claims Act Allegations

NASHVILLE, Tenn. – February 14, 2020 – Cookeville Regional Medical Center Authority, has agreed to pay $4.1 million to settle allegations that it violated the False Claims Act (“FCA”), announced Don Cochran, United States Attorney for the Middle District of Tennessee. The alleged conduct involved payments to physicians in violation of the Anti-Kickback Statute and Stark Law.

“Federal statutes exist to protect the well-being of patients and to prevent improper influence on patient care by providers,” said U.S. Attorney Don Cochran.   “The U.S. Attorney’s Office and our law enforcement partners will continue to aggressively enforce the laws designed to protect the patient and the integrity of federal healthcare programs.”

The settlement resolves allegations by the United States and State of Tennessee that from January 2012 through December 2017, Cookeville Regional Medical Center (“CRMC”), a hospital in Cookeville, Tennessee, submitted false claims for payment to the Medicare program and to TennCare as a result of violations of the Federal Anti-Kickback Statute and the Stark Law. These violations related to financial arrangements between CRMC and physicians associated with its wholly owned subsidiary physician practice, CRMC MSO-Sub 1, Inc. d/b/a Tennessee Heart.

Under the terms of the agreement, the United States will receive $3,647,155.00 and the State of Tennessee will receive $452,845.00.   

“The Stark Law prohibits hospitals and physicians from entering into improper financial relationships that can disrupt the physician decision-making process,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta.  “Our agency, working closely with our law enforcement partners, will continue to protect patients and the federal health care programs that serve them.”

“We are fortunate to have this strong relationship with our federal law enforcement partners, and continue to be diligent in pursuing false claim actions that have the potential to affect quality of our health care, in addition to costing consumers and taxpayers,” said TBI Director David Rausch.

The allegations resolved by today’s settlement were originally raised in a lawsuit filed against CRMC by a former employee who brought claims under the qui tam, or whistleblower, provisions of the FCA, which allow private citizens with knowledge of false claims to bring civil suits on behalf of the government and to share in any recovery. The whistleblower will receive $779,000 as his share of the settlement.

This matter was investigated by the Department of Health and Human Services, Office of Inspector General; the Tennessee Attorney General’s Office; the Tennessee Bureau of Investigation; and the United States Attorney’s Office for the Middle District of Tennessee.  The United States is represented by Assistant U.S. Attorney Sarah K. Bogni. The claims settled by this agreement are allegations only, and there has been no determination of liability.

This case is docketed as United States ex rel. Seabury v. Cookeville Regional Medical Center Authority, d/b/a Cookeville Regional Medical Center, d/b/a Cookeville Regional Medical Group, Inc., f/k/a CRMC MSO, Inc., d/b/a CRMC MSO Sub-1, Inc., d/b/a Tennessee Heart, Civ. Action No. 2:15-cv-00065 (M.D. Tenn.).

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