Vanguard Health Systems, Inc. Agrees To Pay $2.9 Million To Settle False Claims Act Allegations

Vanguard Health Systems, Inc. and certain affiliated companies have agreed to pay civil damages of $2.9 million to settle allegations that they violated the False Claims Act, announced David Rivera, United States Attorney for the Middle District of Tennessee.  The alleged false claims involve violations of the Stark Law and the Anti-Kickback Statute, upcoding of Evaluation and Management (“E&M”) codes, and improper physician supervision of cardiac rehabilitation therapy at the Vanguard-owned Arizona Heart Institute (“AHI”).

Vanguard was headquartered in Nashville, Tennessee before it was purchased by Texas-based Tenet Healthcare Corporation in September 2013, after the alleged conduct took place.

“Enforcement of the False Claims Act remains a priority of the United States Attorney’s Office for the Middle District of Tennessee,” said United States Attorney David Rivera.  “The U.S. Attorney’s Office and our law enforcement partners are committed to protecting the public fisc and vigorously pursuing any allegations of false billings to federal healthcare programs.”

Specifically, the settlement resolves allegations that AHI submitted false claims to the Medicare program by knowingly paying certain physicians salaries and bonuses that were above fair market value and in violation of the Stark Law and the Anti-Kickback Statute.  Vanguard also settled allegations that AHI physicians had upcoded Medicare billings for E&M patient visits in order to obtain larger payments than allowable for the services actually provided.

Finally, the settlement resolves allegations that AHI billed for cardiac rehabilitation therapy provided by a physician who was not properly supervising the therapists providing the services.

Under the FCA, private citizens, known as relators, can bring suit on behalf of the United States and share in any recovery.  The relator in this case will receive over $500,000 as her share of the recovery.

This matter was investigated by the U.S. Postal Service – Office of Inspector General and the United States Attorney’s Office for the Middle District of Tennessee.  The United States was represented by Assistant U.S. Attorney Christopher C. Sabis.  The case is docketed as United States ex rel. Lee v. Vanguard Health Services, Inc., et al., No. 3:13-cv-0171 (M.D. Tenn.).

This settlement agreement is neither an admission of liability by Vanguard nor a concession by the United States that the allegations are not well founded.