Robinson Health System to Pay $10 Million to Settle Illegal Kickback Allegations

The U.S. Attorney’s Office for the Northern District of Ohio recently negotiated a $10 million settlement with Robinson Health System amid allegations of illegal kickbacks. The defendant is a health system management company, which operates a non-profit entity in Portage County, Ohio. The settlement comes on the heels of several other settlements involving providers in the area, including a settlement with Portage Hospital itself several weeks ago.

The case was not actually initiated by a whistleblower, but commenced upon a voluntary self-disclosure by Robinson of ongoing improper financial relationships between itself and several physicians. The relationships, it admitted, were created in order to generate more referrals from area doctors into Robinson-managed facilities.

Details of the case against Robinson Health System

Under both the False Claims Act and the Stark Law, healthcare professionals are prohibited from engaging in financial arrangements (i.e., kickbacks) with regard to patients receiving benefits from Medicare and Medicaid. According to the policies of these agencies, doctors who are anticipating a financial incentive for referring a patient to a certain specialist for treatment are most likely factoring in the kickback above the patient’s subjective needs, which is considered unlawful under both statutes.

In today’s case, Robinson Health System voluntarily disclosed that it had offered “management” positions to area physicians in exchange for the agreement to refer a certain number of patients to its facilities. The management positions involved a salary, but no actual meaningful work was completed by the doctors that could be considered worth the payment.

According to Robinson’s CEO, many of the self-disclosed violations were purely “technical” in nature, including a failure to maintain proper paperwork or time logs. However, the details of the case also reveal the use of office space through questionable leasehold agreements between the company and several physicians – an arrangement which can be forbidden by applicable federal laws.

Improper financial relationships impact patient care

At the heart of the anti-kickback legislation is the notion that the doctor-patient relationship is to be based solely on the patient’s individual needs, and should not be clouded with the overhanging notion that the doctor may receive a financial reward for referring a patient to a specific provider. These improper financial relationships may involve any of the following scenarios:

• Allowing doctors to lease property  owned by a management company at below fair market rates in exchange for an exclusive referral agreement;
• Hiring doctors (or their spouses) for seemingly lucrative positions, when the positions do not involve any actual work;
• Offering generous payments for “lectures” or “conferences” that are actually thinly veiled disguises for a vacation;
• Providing emergency department physicians bonuses for admitting as many patients as possible, even if not medically necessary.

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