For hospital, this fraud scheme quite literally didn't pay

What might seem to be a good idea in the minds of business principals focused obsessively on profit can sometimes look a bit less salutary when viewed from the perspective of passed time.

That has surely been the case for the Pacific Alliance Medical Center and an affiliated company that have been tasked to pay an eye-opening $42 million to federal and state officials pursuant to a just-concluded settlement.

That pact was reached following the government’s joining of fraud-based litigation filed by a federal whistleblower alleging unlawful kickbacks made in the medical industry. That so-called “relator” (who received more than $9 million of the total payment made by the defendants) directed government regulators to an ongoing scheme marked by the unlawful flow of monies to physicians for their patient referrals. Doctor remuneration contingent upon the admittance of patients in a payer’s facility is illegal under federal and state anti-kickback laws.

The kickback payments, notes a recent media article spotlighting the fraud, were “disguised” in various ways. Among other things, the defendants paid excessively high rentals for their use of office space in facilities owned by referring physicians.

The settlement also included government claw back of false claims that the defendants submitted to the Medicare program, which essentially operates as a fraud upon taxpayers and the general public.

One government principal with the U.S. Department of Health and Human Services duly noted after the settlement that false billings and financial schemes based on kickbacks materially erode the public’s trust concerning the health care industry.