New York Hospital Management Company Agrees to $4 Million False Claims Act Settlement

Arising from Stark Law Improprieties

On September 13, 2017 the Justice Department announced that MediSys Health Network Inc. (“MHS”) agreed to pay $4 million to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with referring physicians. MHS owns and operates Jamaica Hospital Medical Center and Flushing Hospital and Medical Center in Queens, New York.

The settlement resolves allegations that the MHS hospitals submitted false claims to the Medicare program for services rendered to patients referred by physicians with whom the MHS hospitals had compensation arrangements that did not comply with the requirements of the Stark Law. The claims settled by this agreement are allegations only, and there has been no determination of liability.

The lawsuit was filed by Dr. Satish Deshpande under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens to bring suit on behalf of the United States and share in the resultant recovery. Dr. Deshpande will receive $600,000 as his share of the recovery.

The case, United States ex rel. Deshpande, et al. v. The Jamaica Hospital Medical Center, et al., Case No. 13-cv-4030 (E.D.N.Y.), was handled by Senior Trial Counsel David T. Cohen of the Civil Division’s Commercial Litigation Branch, Assistant U.S. Attorney Kenneth M. Abell of the U.S. Attorney’s Office for the Eastern District of New York and Associate Counsel David Fuchs from HHS-OIG.

This settlement demonstrates that Stark Law prosecutions and resultant False Claims Act fines and penalties, remain an important weapon in the Justice Department’s enforcement arsenal.

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