Sports clinic agrees to $3 million settlement

A Los Angeles-area orthopedic clinic agreed to pay the U.S. $3 million to settle False Claims Act allegations that it took kickbacks for referring patients to HealthSouth Corp. rehabilitation facilities.

The settlement agreement with the Kerlan-Jobe Orthopaedic Clinic stems from disclosures that Birmingham, Ala.,-based HealthSouth made to the government in 2005 after several executives accused of accounting fraud were ousted and the new management combed the company's books.

Kerlan-Jobe does not admit liability in the agreement. The government took issue with grants of HealthSouth stock options, donations to the Kerlan-Jobe Foundation, loan forgiveness on an equipment lease and a disproportionate ownership interest HealthSouth held in a jointly owned surgery center. The arrangements, spanning 1995-2006, allegedly violated the self-referral and anti-kickback laws.

Kerlan-Jobe specializes in sports injuries, and its staff members are team physicians and consultants to most professional teams in Southern California, including the Los Angeles Lakers and Dodgers, according to its Web site.

The agreement calls for Kerlan-Jobe to enter a three-year corporate integrity agreement with HHS' inspector general's office. In 2007, HealthSouth agreed to pay $14.2 million to resolve allegations involving Kerlan-Jobe and other physicians.

“The settlement allows us to move forward and enables our medical staff to continue to focus its full attention on providing high quality patient care,” the clinic said in a written statement.

What do you think? Post a comment on this article and share your opinion with other readers. Submit your comments to Modern Healthcare Online at [email protected]. Please be sure to include your hometown and state, along with your organization and title.