Urology Group to Settle Allegations of Improper Medical Director Payments

On February 15, 2022, the Department of Justice announced that Brockton Urology Clinic, LLC (“Brockton Urology”) will pay $100,000 to settle allegations of False Claims Act violations for accepting payments for running a nonexistent prostate cancer center.

According to the settlement agreement, in 2011, Brockton Urology entered into an agreement with Good Samaritan Medical Center (“GSMC”) to run a “Prostate Cancer Center of Excellence” at the hospital. The prostate cancer center was never established so Brockton Urology never appointed a medical director to oversee it. However, GSMC paid Brockton Urology as if it had provided medical directorship services for a functioning cancer program from 2011 to 2017. During that time, Brockton Urology referred patients to Good Samaritan. The hospital billed Medicare for the services provided to the Brockton Urology-referred patients, which prosecutors identified as false claims resulting from an “unlawful financial relationship.”

Further complicating matters, during the same six-year time period, Brockton Urology provided on-call urology services to the hospital for which GSMC remitted additional payments to the clinic apart from any sort of documented agreement or contract. Brockton Urology has stated that it was paid fair market value for the on-call services, but prosecutors found no evidence to verify any sort of call coverage arrangement between the clinic and the hospital. According to the court documents, the only agreement between the hospital and Brockton Urology was for a prostate center — one that never existed.

Many questions surrounding these circumstances remain unanswered, but there are two clear takeaways to keep in mind.

1. It is important to monitor and examine physician services arrangements to ensure physicians or groups are paid only for services actually provided – and that physician services are only purchased when a legitimate business purpose, not related to referrals, exists for buying them.

2. The settlement serves as a reminder of the importance of formalizing call coverage arrangements with physicians or groups, along with ensuring that compensation is commercially reasonable, meets the volume or value standard, and is fair market value.

BFMV has reviewed and consulted on medical director and call coverage arrangements for health systems and physician practices nationwide. Contact us for more information.