Montana health system, orthopedic group pays $24M to settle Anti-Kickback violation allegations: 5 things to know

Written by Laura Dyrda | October 10, 2018 | Print  |

Kalispell (Mont.) Regional Healthcare, along with subsidiaries including Kalispell-based Flathead Physicians Group and Northwest Orthopedics & Sports Medicine, reached a settlement with the Department of Justice to resolve allegations the health system violated the False Claims Act.

Here are five things to know:

1. In this whistle-blower case, the DOJ alleges the health system paid physicians more than fair market value and conspired to enter into improper agreements to induce referrals. The arrangements would inappropriately compensate physicians who made referrals to the hospital.

2. KRH allegedly billed Medicare for services referred by physicians that the hospital had improper compensation arrangements with between 2010 and 2018. According to the DOJ, KRH paid excessive full-time compensation to physicians in more than 60 specialties, including orthopedics and neurosurgery, of which many worked less than full time.

3. The DOJ also accused KRH subsidiaries Kalispell-based HealthCenter, Flathead, Northwest Horizons, NOSM and Applied Health Services of paying excessive compensation to physicians employed by KRH, Kalispell Regional Medical Center and other KRH entities to induce referrals to HealthCenter, thus conspiring to violate Anti-Kickback Statute. These entities also allegedly provided HealthCenter with administrative services below fair market value, which reduced expenses and increased profits for physician investors.

4. The health system and its subsidiaries have agreed to pay a $24 million settlement to resolve the allegations. The settlement also resolves the original two lawsuits brought by KRH Physician Network's former CFO, the whistle-blower.

5. The whistle-blower received $5.4 million as his share of the settlement.

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