A major healthcare scandal has rocked the state of Michigan, as Covenant Healthcare System has paid a whopping $69 million to settle allegations of Medicare fraud.
According to federal authorities, Covenant Healthcare System, a regional hospital system based in Saginaw, Michigan, engaged in improper financial relationships with eight referring physicians and a physician-owned investment group. These relationships resulted in the submission of false claims to Medicare, Medicaid, TRICARE, and FECA programs.
The Anti-Kickback Statute and the Physician Self-Referral Law, also known as the Stark Law, prohibit hospitals from billing Medicare for services referred by physicians with whom they have an improper financial arrangement. The settlement resolves allegations that Covenant Healthcare System failed to meet these requirements.
The investigation found that Covenant had contracts with several physicians, including Dr. Asim Yunus, Dr. Kimiko Sugimoto, Dr. Sujal Patel, Dr. Sussan Bays, Dr. Guy Boike, and Dr. Thomas Damuth, to serve as medical directors. However, these arrangements did not satisfy any exceptions to the Stark Law or the Anti-Kickback Statute, leading to referrals that violated the False Claims Act.
The settlement also involves two physicians, neurosurgeon Dr. Mark Adams and electrophysiologist Dr. Asim Yunus, who will pay the United States $406,551.15 and $345,987.54, respectively, to resolve allegations related to their relationships with Covenant.
The settlement with Covenant Healthcare System resolves the following allegations:
At various points between 2006 to 2016, Covenant had contracts with several physicians to serve as medical directors, and none of these arrangements satisfied any exceptions to the Stark Law or the Anti-Kickback Statute.
From June 1, 2006, to December 14, 2009, Covenant employed Dr. Mark Adams, and this financial relationship did not satisfy any exception to the Stark Law, resulting in referrals that prohibited and violated the False Claims Act.
From January 21, 2009, through July 31, 2013, Covenant rented office space to Dr. Ernie Balcueva, and Covenant forgave Balcueva’s rent payments, constituting remuneration that Covenant paid in exchange for referrals from Balcueva in violation of the Anti-Kickback Statute and the False Claims Act.
Covenant permitted Covenant Physician Investment Group to secure an equipment lease through non-arm’s-length negotiations, in order to induce referrals of patients from these physicians, in violation of the Anti-Kickback Statute and the False Claims Act.
As a result of this settlement, which was finalized in 2021, Covenant Healthcare System paid the United States $67,191,436.39 and the State of Michigan $1,808,563.61.
Defendant: Covenant Healthcare System
Criminal Charges: False Claims Act violations
City and State: Saginaw, Michigan
Exact Date: 2021
Sentence or Outcome: Paid $69 million to settle allegations
Dollar Amounts: $69 million, $67,191,436.39, $1,808,563.61
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Key Facts
- State: Michigan
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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