Qui Tam Lawsuit and Federal Investigation Results in Settlement and $1.2 Million Payment by Baldwin Bone & Joint, P.C.

United States Attorney Richard W. Moore of the Southern District of Alabama announces that Baldwin Bone & Joint, P.C. (BB&J), an orthopedic surgery and physical therapy practice located in Daphne, Alabama, has agreed to pay a total of $1.2 million to resolve a lawsuit alleging that it violated the False Claims Act.  The settlement also resolves an allegation that BB&J violated the Physician Self-Referral Law, commonly referred to as the Stark Law.

“This settlement illustrates the United States Attorney’s Office’s commitment to investigate allegations of fraud and abuse of the Medicare and TRICARE programs,” said U.S. Attorney Richard W. Moore.  “False claims against these taxpayer-funded programs harm the entire health care system, as does the improper compensation of physicians to incentivize potentially unnecessary care.”

The civil lawsuit was filed in the Southern District of Alabama by John Seddon, a former employee of BB&J, under the qui tam provisions of the False Claims Act, which permit private individuals to sue for false claims on behalf of the government and to share in any recovery.  The lawsuit is captioned United States, ex rel. John Seddon, v. Baldwin Bone & Joint, P.C., et al., Case No. 15-00569-CG-M, and initiated a federal investigation into the allegations raised by Seddon’s complaint, culminating in the settlement.  The Office of Inspector General of the U.S. Department of Health and Human Services and the Defense Criminal Investigative Service both participated in the investigation on behalf of the Medicare and TRICARE programs, respectively.

The qui tam lawsuit filed by Seddon alleged in part that BB&J violated the False Claim Act by billing Medicare and TRICARE for physical therapy services performed by unauthorized providers, including athletic trainers and an exercise physiologist, who are prohibited from billing these programs.  The Stark Law allegations concerned BB&J’s direct compensation arrangements with its shareholder physicians, namely, that those arrangements violated the Stark Law because the compensation BB&J paid to its shareholder physicians directly or indirectly related to the volume of each shareholder physician’s referrals for designated health services such as physical therapy, X-rays and MRI’s.
 
“Providers who falsely bill Medicare for services they didn’t provide, as alleged in this case, not only harm their patients, they also hurt all beneficiaries who depend on Medicare funding to provide access to quality services,” said Derrick L. Jackson, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “We will continue to work with our law enforcement partners to protect taxpayer dollars for these valuable programs.”

Cynthia A. Bruce, Special Agent in Charge, Southeast Field Office, Defense Criminal Investigative Service added that "DCIS is dedicated to ensuring the integrity of the Department of Defense's Healthcare system.  "Our agents will pursue companies who commit fraud and allow unqualified individuals to provide services to our military members and their families."
As a part of this settlement, Seddon will receive $200,000.  BB&J cooperated with the United States’ investigation, and the settlement will result in the dismissal of the lawsuit.  The government’s resolution of this matter illustrates the government’s emphasis on combating health care 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 investigated by the U.S. Attorney’s Office for the Southern District of Alabama, the Office of Inspector General for the U.S. Department of Health and Human Services, the Defense Criminal Investigative Service, and the Defense Health Agency Program Integrity Office.
  
The claims resolved by this settlement are allegations only; no determination of liability has been made.