Pacific Alliance Medical Center in Chinatown has agreed to pay $42 million in penalties to settle allegations in a federal whistleblower lawsuit claiming it filed false medical claims in a kickback scheme, the U.S. Justice Department announced Wednesday.
The lawsuit alleged Pacific Alliance filed false claims with both Medicare and MediCal, then used the reimbursement dollars to pay above-market rents for space in physicians’ offices and enter into marketing relationships with the physicians’ firms.
The lawsuit alleged that these relationships violated the federal Anti-Kickback Statute and the Stark Law, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.
“This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers,” Acting Assistant U.S. Attorney General Chad Readler said in the statement.
Of the $42 million penalty, nearly $32 million will go to the federal government and about $10 million to the state government.
The hospital said in a statement Wednesday: “It was important for us to put this matter behind us, without any admission of liability, so we can continue to focus instead on the essential, life-saving work we do in our community every day.
“We are confident that we have already put in place safeguards to ensure that our marketing policies and practices comply with the law. We want to reaffirm our unwavering commitment to ethical business practices.”
Public policy and energy reporter Howard Fine can be reached at firstname.lastname@example.org. Follow him on Twitter @howardafine.