Whistle-blower worries: Hospitals likely to see more False Claims suits tied to doctor compensation

"Dr. Michael Reilly's lawyer gave his client strong advice after reviewing a lucrative employment contract that the North Broward Hospital District offered him 15 years ago.

“I should throw this in the trash,” Reilly, a now-retired orthopedic surgeon, recalls the attorney telling him.

The contract, the lawyer said, had major problems, including that it violated the federal Stark law, which bars physicians from referring Medicare patients to hospitals, labs and other doctors that the physicians have financial relationships with unless they fall under certain circumstances.

Reilly didn't sign the contract.

That moment marked the beginning of Reilly's quest to hold North Broward Hospital District—a taxing district that operates five hospitals in Broward County in South Florida—accountable for alleged violations of the law. Reilly later filed a whistle-blower lawsuit against North Broward under the False Claims Act. In September, North Broward and the government settled the case for $69.5 million, with Reilly getting $12 million. North Broward did not admit to any wrongdoing. It declined to comment for this article.

Both plaintiff and defense attorneys predict that more False Claims Act cases alleging Stark violations are on the way, with whistle-blowers largely driving the U.S. Justice Department's enforcement—exponentially multiplying the government's regulatory eyes inside healthcare facilities. That's partly because two giant cases, involving Tuomey Healthcare System and Halifax Health, alerted potential whistle-blowers inside hospitals to the riches they could pocket by bringing such cases, some attorneys say.

In October, Tuomey in Sumter, S.C., agreed to settle with the government for $72.4 million, resolving allegations that it paid doctors in ways that rewarded them for referring patients to the hospital. Last year, Halifax in Daytona Beach, Fla., agreed to pay $85 million to settle allegations that it also had compensated physicians in illegal ways. Halifax did not admit to any wrongdoing. The whistle-blower in the Tuomey case got $18.1 million, while the whistle-blower in the Halifax case bagged $20.8 million."

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