Rush University Medical Center, Medicare False Claims, Illinois 2007

Rush University Medical Center has been caught profiting from patient referrals made by physicians with whom the hospital had improper financial arrangements, the government announced today.

The Chicago hospital agreed to pay $1,547,200 plus interest to resolve allegations that it violated the False Claims Act by entering into certain leasing arrangements for office space with two individual physicians and three physician practice groups that violated the Stark Law.

The Stark Law prohibits a hospital from profiting from patient referrals made by a physician with whom the hospital has an improper financial arrangement. A leasing arrangement is improper under the Stark Law absent a written lease, signed by the parties, that specifies the premises covered by the lease. Leasing arrangements must also be commercially reasonable and consistent with ‘fair market value’ for the premises.

The Stark Law is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and are based solely on the best interests of the patient.

The case was brought under the whistleblower provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. The lawsuit, in part, involves allegations that Rush entered into prohibited financial relationships with certain physicians.

Under the civil settlement announced today, the whistleblowers, Dr. Robert Goldberg and June Beecham, will receive $270,760.

This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the government has used to recover approximately $2.3 billion since January 2009 in cases involving fraud against federal health care programs.

The settlement announced today was the result of a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division; the Department of Health and Human Services, Office of Inspector General; and the Illinois Attorney General’s Office.

Related Federal Cases