Healthcare fraud convictions are news. When the convicted parties are physicians, investors and staff of a physician-owned surgical hospital who now face up to sixty-five years in a federal penitentiary, that is big news. And when some of those convictions were based, in part, on a relatively obscure federal law that appears to expand the reach of federal prosecutors to include commercial and private-pay business that many assumed would fall outside of federal jurisdiction, that really has the industry buzzing.
The case in point, involving Forest Park Medical Center ("FPMC"), is not as earth-shattering as some make it out to be, however. To be sure, this case is a wake-up call for providers who believe that they can avoid liability under federal fraud and abuse laws if they do not accept Medicare or Medicaid patients or otherwise carve out federal program beneficiaries. But it also serves as a reminder that sham arrangements that are intended to compensate physicians to steer patient referrals invariably place the participants at risk of prosecution. This Legal Update explores the background to the Forest Park case and the state and federal statutes upon which the prosecutors relied, and then discusses key implications and takeaways for reviewing existing contractual relationships and internal compliance programs in response to these developments.Read More