U.S. ex rel. Schaefer v. Family Med. Ctrs. of S.C., LLC — Nov. 2016 (Summary)

STARK LAW AND FALSE CLAIMS ACT

U.S. ex rel. Schaefer v. Family Med. Ctrs. of S.C., LLC
C/A No. 3:14-382-MBS (D.S.C. Nov. 8, 2016)

The U.S. District Court for the District of South Carolina, Columbia Division, denied a medical center’s motion to dismiss the United States claims that it and certain employed physicians operated in violation of the Stark Law and the False Claims Act (“FCA”).

The United States filed a complaint alleging that the medical center had employment arrangements with physicians that included compensation directly attributable to the volume or value of the employed physicians’ referrals in violation of the Stark Law and reimbursement based on referrals and unnecessary tests in violation of the FCA.  The U.S. also claimed that in order to maximize revenue, the medical center devised a variety of schemes including, among other things, referencing improper Current Procedural Terminology (“CPT”) codes and ordering unnecessary laboratory tests.  The medical center moved to dismiss the United States’ claims.  In order to survive the motion to dismiss, the U.S. had to allege sufficient facts to support its claims for relief.

The court found that the U.S. had alleged sufficient facts to support both its Stark and FCA claims.  The U.S. argued that the alleged improper billing structure spanned over ten years, allowing the medical center to be reimbursed for millions of dollars.  The U.S. argued that between 2008 and 2015, the medical center was paid over $4 million for unnecessary lipid tests; over $1.6 million for unnecessary chemistry panel tests; over $500,000 for unnecessary hepatic function tests; and over $1 million for unnecessary thyroid panel tests.