Tri-City Medical Center in Oceanside will pay out just under $3.3 million to settle Department of Justice (DOJ) allegations that the hospital had forbidden financial arrangements with local referring physicians.
The DOJ said Tri-City violated the Stark Law, which prohibits hospitals from billing Medicare for certain services referred by a physician who has a financial relationship with the hospital. Some exceptions to the law do exist but did not apply in this case, the DOJ said.
The settlement does not mean Tri-City admitted to the allegations or to any liability. NBC 7 has reached out to the hospital about this story but has yet to receive a response.
According to investigators, Tri-City had 97 financial arrangements with physicians or physician groups that did not comply with the Stark Law.
From 2008 to 2011, five relationships between the hospital’s former chief of staff and physicians “appeared not to be commercially reasonable or for fair market value,” DOJ investigators wrote in a news release.
From 2009 to 2010, the DOJ said another 92 financial agreements with local physicians or practice groups did not meet a Stark Law exception because the written agreements had expired, were missing signatures or could not be found, among other things.
Tri-City agreed to pay $3,278,464 to resolve the allegations.
“Patient referrals should be based on a physician’s medical judgment and a patient’s medical needs, not on a physician’s financial interests or a hospital’s business goals,” said U. S. Attorney Laura E. Duffy of the Southern District of California in a release. “This settlement reinforces that hospitals will face consequences when they enter into financial arrangements with physicians that do not comply with the law. We will continue to hold health care providers accountable when they shirk their legal responsibilities to the detriment of tax payer-funded health care programs.”