In December 2020, news broke that a Baylor Scott & White system hospital agreed to pay a staggering $48 million fine to settle Stark, Physician Self-Referral, and Anti-Kickback legal violations alleged by two doctors under the federal False Claims Act.
The case is styled U.S.A. ex rel. Mitchell J. Magee et al. v. Texas Heart Hospital of the Southwest LLP et al., No. 4:16-cv-00717, In the U.S. District Court for the Eastern District of Texas.
Collectively, these laws are on the books to prevent Medicare-accepting hospitals to bill for most services provided based on referrals from physicians who have an ownership or financial relationship with the hospital.
The purpose of the law is easy to understand. It doesn’t make sense for doctors to have a financial interest in ordering diagnostic tests or other services at a hospital. When this occurs, it incentivizes unnecessary care and cost overruns. Plus, it places profits over patients by sometimes interfering with referrals to a different hospital that may offer better care or services for particular patient’s needs.
According to the whistleblower physicians, the Texas Heart Hospital of the Southwest LLP, which does business as Heart Hospital Baylor Plano, engaged in precisely this type of conduct. The doctors claimed that the hospital placed high demands in the forms of quotas on its physician owners to generate more business for the hospital.
The two physicians claimed that, since at least 2010, Heart Hospital required its doctor owners to refer at least 48 patients per year for treatment at the hospital—this is about 4–8 higher than what’s standard other hospitals. The doctors filed suit after they claimed that the hospital revoked their ownership interest when they couldn’t meet the hospital’s patient referral quota.
In a related type of situation, we’ve seen many cases in recent years where surgeons try to strong-arm their patients into having procedures done at in-office or physician-owned surgery centers rather than hospitals. There is a growing trend of plastic surgeons, cosmetic surgeons, orthopedic surgeons, and other specialists to set up their own operating rooms to try to grab some of the lucrative facility fee income away from hospitals. Unfortunately, it’s my experience the level of patient safety simply isn’t the same.