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Mercy Hospital Springfield and affiliate Mercy Clinic Springfield Communities must pay $34 million to settle alleged health care fraud claims.SBJ file photo
Mercy Hospital Springfield and affiliate Mercy Clinic Springfield Communities must pay $34 million to settle alleged health care fraud claims.

SBJ file photo

Mercy Hospital Springfield to pay $34M in fraud settlement

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Mercy Hospital Springfield and affiliate Mercy Clinic Springfield Communities agreed to pay $34 million to settle alleged health care fraud claims.

The health care providers specifically were accused of violating the federal False Claims Act by submitting false claims to Medicare for chemotherapy services. The services were given to patients after being referred by oncologists whose compensation was based, in part, on the value of their referrals. Under federal law, such financial relationships between hospitals and clinics are restricted, according to a news release from the U.S. Justice Department.

“When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone,” said Chad Readler, acting assistant attorney general for the Justice Department’s civil division, in the release. “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

The settlement follows a 2015 lawsuit filed by whistleblower Dr. Viran Roger Holden, a physician employed by one of the defendants. Under the False Claims Act, citizens can file suit on behalf of the government for false claims and share in the recovery. Holden is slated to receive $5.4 million of the settlement funds. Holden sued the health system in May 2015 claiming he was wrongfully terminated for alleging oncologists had committed fraud.

According to a Mercy news release, the settlement involves 2009-14 physician compensation at the Mercy Hospital Infusion Center. Mercy held back the necessary funds during the previous fiscal year for the planned expense; hospital officials have been in talks with the federal government for several months.

In a video statement, Mercy Central Communities Regional President Jon Swope said because the expenses were planned, the settlement will not result in layoffs or increased costs for patients.

“This issue was about administrative mistakes in how we paid our doctors,” he said. “The laws that regulate how doctors are paid are extremely complex and the Justice Department has said we didn’t intentionally violate them.

“Even so, we made a mistake and we are committed to doing better going forward.”

Through the agreement with the Justice Department, Mercy Hospital Springfield and Mercy Clinic Springfield Communities also are required to conduct five years of training and education and adhere to internal reviews and policy and procedure updates. The health providers also will be watched by the federal government related to physician contracting and compensation packages.

Separately, in March, Mercy Clinic Springfield Communities was ordered to pay $28.9 million after a jury found the organization and one of its doctors guilty of negligence.

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