While the American Hospital Association scored a major legal victory for hospital-owned home-care agencies, at least one independent home-care operator is coughing up a big fine for allegedly making improper patient referrals.
Apria Healthcare Group, a Costa Mesa, Calif.-based home-care provider, said last week that it will pay the government nearly $1.7 million to settle allegations that the company improperly compensated physicians in exchange for patient referrals.
The anti-kickback provisions of the federal Medicare and Medicaid fraud and abuse statutes bar any form of remuneration to induce patient referrals.
Apria was first sued in August 1995 by Mark Parker, who had served for about three years as a branch manager in Atlanta for Homedco Group. Homedco merged with Abbey Healthcare Group in June 1995 to form Apria.
The U.S. Justice Department intervened in the whistle-blower lawsuit and filed an amended complaint in July in U.S. District Court in Atlanta.
The amended complaint focused on allegations that Apria had entered a sham medical consulting agreement with Georgia Lung Associates, a group of physicians in Austell, Ga.
The complaint alleged that Apria had violated anti-kickback provisions by paying these physicians not for consulting work but for referring patients to their home-care business.
The original complaint filed by Parker was much broader, including allegations that Apria had overpaid employees of Providence Memorial Hospital in El Paso, Texas, in return for referrals and then set up similar schemes across the country.
Under a proposed settlement, which Apria expects to be finalized by the end of the year, the government and Parker will dismiss all related lawsuits. Apria and individual physicians who were also listed as defendants in the government's complaint will pay a settlement amount totaling about $2 million but will admit no wrongdoing.
"While we remain confident in the strength of our position in this litigation, we believe it is in the best interest of Apria and its shareholders to settle the suit now and avoid the distraction and additional expense that would have been generated by a protracted legal battle," said Jeremy M. Jones, Apria's chairman and chief executive officer.
But Mike Bothwell, the plaintiff's attorney, said Apria may not be out of the woods yet. He said the government could still choose to pursue the allegations of other illegal arrangements that were not included in the government's amended complaint.
In addition, Bothwell said the settlement did not dismiss possible criminal and HHS penalties that could result from the allegations in the suit. He also said other former employees of Apria have approached him about bringing additional lawsuits against Apria.
Apria executives said they're not aware of any additional lawsuits or of any criminal investigations into the company's activities. The company said no criminal charges have been filed against it.
Justice Department officials had no comment on their actions related to the lawsuit.