LOS ANGELES (CN) — An acute care hospital in Los Angeles’ Chinatown will pay $42 million to settle federal accusations it submitted false claims to Medicare and MediCal for patients referred through doctors who were paid illegal kickbacks.
Pacific Alliance Medical Center and PAMC Ltd. agreed to pay $31.9 million to the federal government and $10 million to California. The settlement with the United States includes $9.2 million to a whistleblower, Paul Chan.
Chan, a former manager for one of the defendants, exposed an arrangement between the hospital owners and referring physicians that disguised kickbacks by paying above-market rates to rent office space in doctors’ offices, according to the Department of Justice.
PAMC also paid referring physicians thousands of dollars each month through a shared agreement to market physicians’ practices to prospective patients, according to the federal lawsuit filed in June 2013.
“These payment agreements included sublease contracts and marketing assistance contracts that greatly exceeded fair market value and were specifically contingent upon the volume of referring providers’ admissions to Pacific Alliance Medical Center hospital, all of which amounted to illegal kickbacks and were in violation of federal and California law,” the lawsuit states.
Christian Schrank, with the Department of Health and Human Services, Office of Inspector General, said such financial arrangements compromise the impartiality of physicians, increase health care costs and damage the public trust.
“This settlement is a warning to health care companies that think they can boost their profits by entering into improper financial arrangements with referring physicians,” Schrank said in a statement.
The defendants did not have to admit any wrongdoing. They have until July 7 to pay.
Defendants in the June 14, 2013 lawsuit were PAMC Ltd.; PAMC partners and medical doctors Shin-Yin Wong, George Ma, Tit Li, Carl Moy, Thick Gong Chow, and Stephen Kwan.