Texas Hospital Settles with DOJ on Alleged False Claims Act Violations

Citizens Medical Center in Victoria, Texas, has agreed to a $21.75 million settlement with the U.S. Department of Justice for allegations that it violated the False Claims Act (“FCA”) by engaging in improper financial relationships with referring doctors.

In United States ex rel. Parikh, et al. v. Citizens Medical Center, et al., the government charged that the hospital provided compensation that was above fair market value to several cardiologists. In addition, the suit alleged that the hospital provided financial incentives to emergency room physicians for referring patients to the cardiologists in violation of the Stark Statute, which places restrictions on the financial relationships hospitals may have with physicians who refer patients to them.

The government’s case arose from a lawsuit filed by three whistleblowers under the qui tamprovisions of the FCA. The whistleblowers — Dakshesh “Kumar” Parikh, Harish Chandna and Ajay Gaalla — will share almost $6 million from the Citizens Medical Center settlement obtained by the DOJ.

The DOJ said that the settlement was part of the DOJ’s ongoing Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, a joint effort by the DOJ and the U.S. Department of Health and Human Services. Announced in 2009, the program has recovered more than $24 billion to date through False Claims Act cases.

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