United States ex rel. Singh v. Bradford Reg'l Med. Ctr. - 752 F. Supp. 2d 602 (W.D. Pa. 2010)

Rule:

Simply stated, the Stark Act, 42 U.S.C.S. § 1395nn, establishes a straightforward test that compensation arrangements should be at fair market value for the work or service performed or the equipment or space leased—not inflated to compensate for the physician's ability to generate other revenues. Under this standard, a fixed payment compensation arrangement such as the one in this case may be considered as taking into account the volume or value of referrals if that fixed payment is in excess of fair market value, i.e., if it includes some sort of payment above and beyond the market value of the physician's services.

Facts:

Plaintiff relators alleged that a regional medical center sought to gain substantial patient referrals for diagnostic nuclear imaging from doctors and a physician practice by entering into an arrangement that took into account anticipated referrals. The arrangement involved a sublease and a guaranty that relieved the doctors of a personal liability they owed of $200,000 for a camera. Plaintiff relators commenced the present qui tam action pursuant to the False Claims Act (FCA), 31 U.S.C.S. §§ 3729 et seq., contending that false claims were submitted arising out of violations of the Stark Act, 42 U.S.C.S. § 1395nn, and the Anti-Kickback Act, 42 U.S.C.S. § 1320a-7b. The parties filed cross-motions for summary judgment.

Issue:

1. Under the circumstances, did the defendant medical providers violate the Stark Act? 
2. Were the violations done knowingly for the purposes of the False Claims Act?

Answer:

1) Yes. 2) No.

Conclusion:

The court found that the arrangement in question was a substantial benefit that qualified as remuneration under the Stark Act and regulations. Accordingly, the court concluded that a direct financial relationship existed between the medical facility and the doctors. The court further found that the compensation arrangement was inflated to compensate for the doctors' ability to generate anticipated referral revenues and therefore was not fair market value under the Stark Act. None of the arrangements were protected by an exception or fit within a safe harbor. Thus, the court found that the providers violated the Stark Act. However, the court was unable to conclude as a matter of law that the violations were done knowingly for purposes of the FCA or that defendants violated the Anti-Kickback Act.