DOJ Intervenes in FCA Case Regarding Hospital Alliance with Physicians; 340B drugs are a problem | Healthcare Compliance Association (HCCA)

Medicare Compliance Report 31, no. 14 (April 18, 2022)

The Department of Justice (DOJ) said on April 11 that it had intervened in a whistleblower lawsuit against Methodist Le Bonheur Healthcare (MLH) in Memphis, Tennessee, and Methodist Healthcare Memphis Hospitals (collectively, Methodist) that was started by the former president of an MLH hospital and a former MLH board member. Methodist is accused of violating the Anti-Kickback Statute (AKS) and the False Claims Act (FCA) by paying West Clinic PC, which owns outpatient oncology clinics, for patient referrals through compensation and management arrangements made in its quest to build a “wallless” cancer center, according to the U.S. Attorney’s Office for the Central District of Tennessee.[1] West, known as West Cancer Center, is not named in the complaint.

In addition to disputing the alliance’s motive, the DOJ alleged that Methodist planned to increase its access to 340B drug discounts by acquiring West’s cancer clinics, an unusual allegation in an FCA lawsuit.

Methodist purchased West’s assets and entered into agreements to lease its non-physician employees and compensate doctors for their professional and management services from 2012 to 2018, paying West $300 million. There was no plan for the Methodists to employ the doctors. “Notwithstanding the contracts and the requirements therein which purported to provide a legal means for Methodist to pay West in exchange for dismissals, the conduct of Methodist and West shows that these agreements were largely meaningless paper,” the alleged DOJ in its April 11 complaint.[2]

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