Continuing a trend we reported in January 2014, the U.S. Department of Justice announced another multi-million dollar settlement of alleged False Claims Act (“FCA”) violations.  In this case, Halifax Hospital Medical Center and Halifax Staffing, Inc. (collectively “Halifax”) agreed to pay $85 million to resolve allegations that they violated the False Claims Act by submitting claims to Medicare that violated the Stark Law.  United States ex rel. Baklid-Kunz v. Halifax Hospital Medical Center, et al., No. 09-cv-1002 (M.D. Fla.).

Halifax entered into contracts with six medical oncologists that included payment of incentive bonuses to the physicians.  The Government alleged that Halifax knowingly violated the Stark Law when they executed these contracts because the incentive bonus improperly included the value of payment for referrals made by the physicians.  The Stark Law prohibits physicians from referring their Medicare and Medicaid patients to business entities with which they have a financial relationship, including a compensation arrangement.  The Government also alleged that Halifax knowingly violated the Stark Law by paying three neurosurgeons more than the fair market value of their work.

The settlement resolves qui tam claims originally filed by Halifax’s Director of Physician Services in 2009, in which the Government later intervened alleging violations of the False Claims Act, the Stark Law, and the federal Anti-Kickback Statute.  She will receive $20.8 million of the settlement proceeds.  The settlement does not resolve the relator’s claims that the hospital admitted Medicare and Medicaid patients to inpatient status when it was not medically necessary.  The Government did not intervene in these claims, which are scheduled to be tried in July.

Halifax did not admit liability as part of the settlement, but in a November 13, 2013 ruling, the U.S. District Court for the Middle District of Florida held that the contracts with the medical oncologists violated the Stark Law because the incentive bonus provision in the contracts did not fit within the bona fide employment relationship exception to the Stark Law’s prohibition on receiving payment for referrals.  This was the case because the bonus was based on factors in addition to services performed personally by the physicians.  As part of the settlement, Halifax also agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General, which reportedly obligates Halifax to undertake internal compliance reforms and submit its federal health care program claims to independent review for the next five years.

This case demonstrates the importance of carefully reviewing physician compensation arrangements to avoid substantial exposure in connection with alleged violations of the Stark Law and the False Claims Act.

Updated March 18, 2014:  This post has been updated to note there is a trial scheduled for July on the claims in which the Government did not intervene and were not resolved by the settlement in this matter.

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Photo of Michael R. Bertoncini Michael R. Bertoncini

Michael R. Bertoncini is a Principal in the Boston, Massachusetts, office of Jackson Lewis P.C. He practices labor and employment law, with a particular emphasis on labor relations, employment law counseling and litigation, and data privacy and security law.

In labor relations matters…

Michael R. Bertoncini is a Principal in the Boston, Massachusetts, office of Jackson Lewis P.C. He practices labor and employment law, with a particular emphasis on labor relations, employment law counseling and litigation, and data privacy and security law.

In labor relations matters, he regularly counsels clients on the practice of positive employee relations, negotiates collective bargaining agreements on behalf of organized clients, represents clients in labor arbitrations and National Labor Relations Board proceedings, and counsels clients with respect to rights and obligations under collective bargaining agreements and applicable labor and employment laws. He also has extensive experience in advising organizations responding to corporate campaigns and negotiating neutrality agreements.

Mr. Bertoncini’s privacy and data security practice focuses on advising clients on complying with HIPAA and other state and federal privacy and data security laws. He regularly reviews and develops policies and procedures, written information security plans and integrated compliance programs to assist clients in meeting their obligations under privacy and data security laws. Mr. Bertoncini has represented clients in investigations of alleged data breaches and advises them on their reporting obligations in the event of a data breach. He also conducts workplace training programs on HIPAA compliance and related privacy and data security topics.

Before joining Jackson Lewis, Mr. Bertoncini was Deputy General Counsel for a hospital system that is the largest fully integrated community care organization in New England. He was responsible for all of the system’s labor and employment law matters, and was involved in its acquisition by a private equity firm as well as its growth from six to ten hospitals in a twelve-month period. His three years as in-house counsel for this large health care system give Mr. Bertoncini a keen understanding of the impact of labor and employment law issues on clients’ business operations.

In addition to his labor relations and privacy experience, Mr. Bertoncini has extensive experience in conducting internal investigations and counseling clients on whistleblower and retaliation matters, as well as negotiating executive agreements, both employment and separation agreements. Mr. Bertoncini also represents clients in the litigation of employment matters. His litigation experience includes matters before federal and state courts and administrative agencies. He has appeared before United States Courts of Appeals and District Courts, Massachusetts and New York state courts, the Equal Employment Opportunity Commission, and the Massachusetts Commission Against Discrimination.

Mr. Bertoncini is a frequent speaker and trainer on labor and employment law topics for various organizations including Massachusetts Continuing Legal Education, Council on Education in Management, Lorman Education Services, the Boston Bar Association, and several chambers of commerce.

While attending Boston College, he received the John A. McCarthy, SJ Award for the most distinguished Scholar of the College thesis.