A medical office building dispute between a hospital and 10 physicians that made healthcare press headlines two months ago has been settled quietly without further court action.
Terms of the settlement are confidential, but the physicians still are renting office space from the hospital and remain on its medical staff, said Christopher Jensen, the physicians' attorney.
Mr. Jensen said the settlement represents an "obvious attempt (by the hospital) of gaining back old relationships with the physicians."
The hospital, Corona (Calif.) Regional Medical Center, strained relationships with the physicians when it sued them for refusing to pay higher rental fees for space in two hospital-owned medical office buildings.
The hospital said the rent, negotiated by the hospital's previous owners, was so far below the going market rate for office space that it could be viewed as a violation of the anti-kickback provisions of the Medicare and Medicaid fraud and abuse statutes. Those provisions bar any form of remuneration to induce patient referrals.
In a surprising decision, a California Superior Court judge last October agreed with the hospital, ruling that the hospital's motivation in offering low-rent office space was enough to violate federal law even though the physicians were unaware of the incentive to send patients to the hospital. Legal experts said the decision represented the broadest judicial interpretation of the anti-kickback laws to date (Nov. 8, 1993, p. 17).
The physicians vowed to appeal, but they agreed to an out-of-court settlement last month, Mr. Jensen said.
He said trial court decisions in California can't be cited as legal precedent, but the Corona ruling does encourage hospitals to raise the same issue in similar contract negotiations with their physicians.-David Burda