VHS of Michigan, also known as the The Detroit Medical Center, will split a nearly $30 million payment with Vanguard Health Systems and Tenet Healthcare Corporation to resolve allegations that they tried to induce Medicare patient referrals from referring physicians, a violation of the False Claims Act and the Anti-Kickback Statute (AKS).

Originally owned by Vanguard, DMC, which operates hospitals in and around Detroit, including Sinai Grace Hospital and Harper University Hospital, was acquired by Tenet in 2013. Between January 2014 and December 2017, both hospitals allegedly leased DMC-employed mid-level nurse practitioners and physician assistants free of charge or below fair market value to 13 referring physicians in exchange for additional Medicare patient referrals, according to the case, U.S. ex rel. Meythaler v. Detroit Medical Center, Inc., et al.

The physicians previously referred a large number of patients to both, said the government, which asserted that these actions violated the AKS, which prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare and other federally funded programs. Violations of AKS also go against the False Claims Act,
All three defendants will pay $29,744,065, with the settlement not constituting as an admission of guilt or liability.

“Physicians should evaluate where to send patients for medical services based on the quality of care the patients will receive, not the financial benefits that the physicians will reap,” said Deputy Assistant Attorney General Michael Granston of the Justice Department’s civil division, in a statement.

Under the False Claims Act’s qui tam (whistleblower) provision, private parties can sue on behalf of the U.S. government and for the government to intervene if it chooses. In this case, the whistleblower was Dr. Jay Meythaler, a former employee of DMC-affiliate Wayne State University Medical School, who filed his suit in 2015, reported The Detroit News.

In accordance with the law, Meythaler will receive a portion of the settlement, in the amount of $5,205,211.37. DMC spokesperson Brian Taylor told The Detroit News that it is still fully compliant with all state and federal healthcare program requirements, and that no leases were executed following Tenet’s acquisition of DMC.

“Once we became aware of the allegations, Tenet and DMC fully cooperated with the government throughout its investigation. The matter was resolved fully to avoid the expense and operational distraction,” he said.

Trial attorney Kristen Murphy of the Civil Division and Assistant U.S. Attorney Anthony Gentner for the Eastern District of Michigan handled the case.

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