Memphis-Based Methodist Le Bonheur Healthcare and Methodist Healthcare-Memphis Hospitals Pay $7.25 Million to Settle Allegations that They Violated the False Claims Act

NASHVILLE – United States Attorney Henry C. Leventis announced today that Methodist Le Bonheur Healthcare and Methodist Healthcare-Memphis Hospitals (“Methodist”) have paid $7,250,000 to resolve allegations that Methodist violated the False Claims Act. This settlement resolves allegations that Methodist caused the submission of false claims to Medicare that resulted from improper financial arrangements between Methodist and the West Clinic, PLLC (“the West Clinic”), including kickbacks that Methodist paid to the West Clinic as part of its affiliation with the West Clinic.

“Federal law prohibits money from influencing where a doctor refers a patient for treatment to keep doctors focused solely on what is best for the patient,” said United States Attorney Henry C. Leventis. “We contend that Methodist’s affiliation with the West Clinic ran afoul of that law. When hospitals pay kickbacks to physician practices, regardless of what form those kickbacks take, they can expect to be the focus of our enforcement efforts.”

In its complaint, the United States alleged that, from December 2011 until February 2019, Methodist had a multi-agreement affiliation with the West Clinic and the University of Tennessee Health Science Center. The affiliation agreements with the West Clinic included an Asset Purchase Agreement, Management Services Agreement, Leased Employee and Administrative Services Agreement, and Professional Services Agreement. According to the complaint, Methodist used these agreements as a vehicle to pay kickbacks to the West Clinic in part to induce the West Clinic to refer Medicare beneficiaries to Methodist. The affiliation ended in 2019 and is no longer ongoing.

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Jeffrey Liebman and David Stern. Liebman was a former president of Methodist University Hospital, and Stern was a former Dean of the University of Tennessee Health Science Center. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The Act also permits the United States to intervene and take over the litigation and receive a portion of any recovery, such as the United States did here. Liebman and Stern will receive a share of the recovery. The qui tam is captioned United States ex rel. Liebman v. Methodist Le Bonheur Healthcare, et al., Case No. 3:17-cv-00902 (M.D. Tenn.).

The investigation and resolution of this matter illustrates the government’s emphasis on combatting healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

This matter was handled by Assistant U.S. Attorney Ellen Bowden McIntyre.

The claims settled by the settlement are allegations only, and there has been no determination of liability.

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