Cardiology Group to Pay More than $1.33 Million to Settle Allegations of Stark Law and False Claims Act Violations

According to United States Attorney Richard Hartunian of the Northern District of New York, Cardiovascular Specialists, P.C., has agreed to pay the federal government $1,336,636.98 plus interest to settle allegations that it violated the federal Physician Self-Referral Law (also known as the Stark Law) and the federal False Claims Act by knowingly compensating its physicians in a manner that violated federal law. Cardiovascular Specialists is a group practice of cardiologists with offices throughout upstate New York does business as New York Heart Center (NYHC).

USDOJ alleges that NYHC used a compensation system that violated the Stark Law, and thereby the False Claims Act, by compensating each NYHC partner-physician using a formula that took into account the volume or value of that physician’s referrals for nuclear scans and CT scans.  

 The Stark Law is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives that encourage referrals for unnecessary services, which in turn increase health care costs for federal health care programs such as Medicare and Medicaid. The law prohibits physicians from referring federal health care beneficiaries to providers with whom they have financial relationships, including those in their own group medical practices, unless the relationship falls within an exception to the Stark Law.  If a medical group’s financial relationship with a physician does not fall within an exception, the group cannot bill Medicare or any other federal health care program for the physician’s prohibited referrals.  The Stark Law does not permit medical practices to compensate physicians in a manner that directly takes into account the volume or value of the physician’s referrals for services that are not personally performed by that ordering physician.

In a US DOJ press release, United States Attorney Hartunian said “Today’s settlement is another example of this office’s commitment to ensure that services paid for by federal health care programs are based on the best interests of patients rather than the financial interests of referring physicians. Special Agent in Charge Thomas O’Donnell of the United States Department of Health and Human Services Office of Inspector General (HHS-OIG), New York region, said “Medical decisions should always be made on the basis on what’s best for the patient’s health, not the physician’s finances. The compensation system in place in this case had the potential to influence medical judgment, which would be unacceptable.

For more information, please contact the author, David R. Ross, who served as Acting New York State Medicaid Inspector General under Governors Pataki and Spitzer, as well as General Counsel, Deputy Medicaid Inspector General, and Director of Audits and Investigations for the Office of the Medicaid Inspector General (OMIG). He can be reached at (518) 462-5601 or via e-mail at dross@oalaw.com.