Not brain surgery: neurologist settles Stark Law claims, will pay $1.8 million.

Medically unnecessary treatments

As a general rule, patients want only the medical care that is necessary to get healthy. Provide the treatment that is necessary, so one can get back to living life.

As a healthcare provider the incentives can be a little more mixed. Sure, there’s the Hippocratic Oath, but there’s also the basic economic reality that the more treatment that a provider gives, the more they can get paid.

You can see why it would be easy for the ideal to give way to reality.

So, the law is set up to prevent incentives that would lead to unnecessary medical procedures. One of those laws is the Stark law. The Stark Law, or Physician Self-Referral Law, prohibits physicians from referring Medicare or Medicaid patients to entities with which they or their family have a financial relationship. Aimed at preventing conflicts of interest in healthcare, it ensures medical decisions are made based on patient need, not financial gain.

The scheme

The scheme here was simple. A neurologist owned a clinic and various diagnostic centers which ran tests for the neurology clinic. According to the Settlement Agreement, the neurologist allegedly self-referred neurology patients from the clinical practice to his diagnostic imaging centers for diagnostic procedures in violation of the Stark Law. Those procedures were medically unnecessary procedures in violation of the False Claims Act.

Why were the procedures medically unnecessary? Again, because the patients’ diagnoses or medical records allegedly did not support them and unlicensed and untrained technicians had incorrectly or inadequately rendered them. In short, the patients didn’t need the tests and the tests were performed by people who didn’t know how to run the tests. Sure, if you know that the tests are not necessary, it doesn’t matter who runs them—the doctor isn’t learning anything from them—the key is that the tests get run and billed for.

The penalty

$1.8 million. The neurologist and his diagnostic facilities will pay the U.S. and Texas $1,800,000.00 of which $1,182,304.70 is restitution. The Settlement Amount for the Texas Covered Conduct is $14,903.99 of which $10,310.73 is restitution. Texas state share of the Medicaid portion is $7,859.89. The U.S. will pay $6,445.11 to Texas after the relator’s share. If the neurologist and diagnostic facilities fail to pay within 30 days of the date payment is due, they will be in default of their payment obligations.

The whistleblower

The whistleblowers here stayed anonymous.

The whistleblower reward

The whistleblower will receive 18% of the award, or $324,000. Under the qui tam provision of the False Claims Act, a private party may file an action on behalf of the United States and receive a portion of the recovery, typically between 15-30%.

If you think you’ve observed fraud or misconduct, we can evaluate your options. Vivek Kothari is a former federal prosecutor who represents whistleblowers. For a free consultation, contact Vivek by email, Signal, or fill out the contact form.