The U.S. Department of Justice is asking for Halifax Health to pay between $350 million and $600
million in damages and penalties in a lawsuit accusing the hospital of defrauding Medicare through illegal contracts with physicians.
Elin Baklid-Kunz, a Halifax
Health employee, brought a suit in 2009 accusing Halifax Health of illegal kickbacks to doctors,
improper admissions and unnecessary spinal surgeries. The Justice Department joined the case
in 2011 in support of some of the allegations.
In a motion for partial summary judgment
filed last week, the Justice Department asked for $102.8 million in damages and an additional $250
million to $500 million in penalties.
Halifax Health, a 678-bed public hospital system, denies all of the
allegations and filed its own round of legal briefs last week asking for summary judgment in its
are going to say zero, and they are going to say whatever they want to say,” Halifax Health
CEO Jeff Feasel said when asked Monday about potential damages for the hospital.
A Justice Department
spokesman could not comment about the case Monday.
The eye-popping figures requested by the
Justice Department could result in the largest judgment ever in a whistleblower suit of its kind, said Marlan Wilbanks, an attorney for
“There has to be a huge punishment for cheating the government,” said Marlan
Wilbanks, an attorney for Baklid-Kunz. ”If you didn’t have that, the system would
be in worse shape than it is now. If Halifax is wrong and the government and (Baklid-Kunz) are
right, they’ve got huge problems at Halifax.”
The government’s claims for damages
stem from an alleged violation of the Stark Law, which prohibits Medicare and Medicaid payments for hospital services that are
prescribed by doctors who have profit-sharing agreements with the hospital.
The Department of Justice
alleges Halifax Health knowingly violated the Stark Law from the 2005 to 2009 by entering into
employment agreements with six medical oncologists that compensated them based on the operating
margin of the hospital’s oncology program. The Justice Department says the hospital
knowingly submitted thousands of false claims resulting in millions of dollars in payments.
actions are exactly what the Stark Law was enacted to prevent: physicians basing referral decisions
on financial gain rather than a patient’s best interests,” the Justice Department wrote
in its motion filed in federal court in Orlando.
The Halifax Health Board of Commissioners
met Monday evening behind closed doors to discuss legal strategies. The consensus of the board
was to defend all of the allegations, said Dave Davidson, general counsel for Halifax Health.
“We think all the
contracts were valid, and we are going to defend it,” Davidson said.
In its filing, Halifax
Health’s attorneys argued the financial agreements were all above board because of an
exception in the Stark Law.
Halifax Health wrote in its motion the government is not “entitled to the
draconian fines and penalties it demands for its hyper-technical reading of the Stark Law.”
The case is set for trial in November.
Baklid-Kunz filed her action under a federal law that allows her to
recoup 15 to 25 percent of damages.
Similar claims involving kickback violations have resulted in significant
damages for other hospitals. In 2010, the Health Alliance of Cincinnati agreed to pay $108
million to settle claims that it engaged in an illegal kickback scheme, according to a Department of
Justice news release.
The suit comes at a time when Halifax Health is looking to merge with 112-bed Bert Fish
Medical Center in New Smyrna Beach and add outpatient services in Deltona and Ormond Beach.
HMA, a for-profit provider
based in Naples, is also looking to merge with Bert Fish. The Justice Department is
investigating HMA amid allegations it improperly admitted patients to boost profits.
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