SAGINAW, Mich. – Covenant Healthcare System, a hospital system in Saginaw, has paid over $69 million to resolve allegations under the False Claims Act.
The allegations involved improper financial relationships with eight referring physicians and a physician-owned investment group, resulting in the submission of false claims to the Medicare, Medicaid, TRICARE, and FECA programs.
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Two physicians, neurosurgeon Dr. Mark Adams and electrophysiologist Dr. Asim Yunus, also paid the United States $406,551.15 and $345,987.54, to resolve allegations related to their relationships with Covenant.
The settlement resolves allegations that Covenant had contracts with six physicians to serve as medical directors, and none of these arrangements satisfied any exceptions to the Stark Law or the Anti-Kickback Statute. The financial relationship between Covenant and Adams did not meet any exception to the Stark Law, and referrals for designated healthcare services by Adams to Covenant were prohibited and violated the False Claims Act.
Officials say that Covenant also rented office space to Dr. Ernie Balcueva and forgave Balcueva’s rent payments, creating a financial relationship that violated the Anti-Kickback Statute and the False Claims Act. Covenant Physician Investment Group (CPIG), a group owned by Covenant-employed physicians, was allowed to secure an equipment lease through non-arm’s-length negotiations, in order to induce referrals of patients from these physicians, in violation of the Anti-Kickback Statute and the False Claims Act.
As a result of the settlement, Covenant paid the United States $67,191,436.39 and the State of Michigan $1,808,563.61. The settlement remained under seal while the United States continued its investigation into Adams and Yunus, which led to the settlements with the two doctors.
“Improper financial relationships and kickbacks undermine the integrity of federally-funded healthcare programs by influencing physician decision making,” said U.S. Attorney Dawn N Ison in a statement.