McAllen Hospitals L.P., Medicare Fraud, Texas 2006
McAllen Hospitals L.P., a subsidiary of Universal Health Services Inc., has agreed to pay the United States $27.5 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute, and the Stark Statute between 1999 and 2006.
The settlement involves allegations that McAllen Hospitals L.P. entered into financial relationships with several doctors in McAllen, Texas, to induce them to refer patients to the defendants' hospitals. The government alleged that these payments were disguised through a series of sham contracts, including medical directorships and lease agreements.
According to the government, these improper financial relationships between health care providers and their referral sources can corrupt a physician's judgment about the patient's true healthcare needs, yielding a substantial recovery for taxpayers and making health care more affordable for patients.
The settlement resolves allegations raised against both the parent and the subsidiary in a qui tam lawsuit filed in 2005 by Bruce Moilan, a former employee of the defendants, United States ex rel. Moilan v. McAllen Hospitals, L.P., et al., Case No. M-05-CV-263 (S.D. Tex.). Under the False Claims Act, private citizens can bring suit on behalf of the government and share in any amounts that are obtained through that legal action.
As part of the agreement, South Texas Health Systems will enter into a 5-year Corporate Integrity Agreement that requires it to establish procedures for tracking and evaluating financial arrangements between its health care facilities and their referral sources. The agreement also requires specific training for South Texas Health System representatives involved with financial arrangements, an independent third-party's annual review of the health system's compliance with certain Corporate Integrity Agreement obligations involving financial arrangements, and a report to the Office of Inspector General by the independent third-party reflecting the results of the review.
Of the $27.5 million to be paid by the defendants, the federal government will receive $25,208,333 and the state of Texas will receive $2,291,667 for claims submitted to the state Medicaid program.
Defendant: McAllen Hospitals L.P.
Criminal Charges: Violated the False Claims Act, the Anti-Kickback Statute, and the Stark Statute
City and State: McAllen, Texas
Exact Date: 1999-2006
Sentence or Outcome: Paid $27.5 million settlement
Dollar Amounts: $27.5 million
Key Facts
- State: Texas
- Category: Healthcare Fraud
- Source: DOJ Press Release â†â€â€
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