$20 million awarded to former employee of Daytona hospital in Medicare lawsuit


The Daytona Beach-based Halifax Hospital Medical Center and Halifax Staffing Inc., agreed to pay $85 million in a settlement that involved allegations they submitted Medicare claims that violated federal law, the U.S. Department of Justice announced Tuesday.

140313_dt_front03The settlement stems from a whistleblower complaint filed by a former employee of Halifax Hospital, Elin Baklid-Kunz, pursuant to the qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the government and to share in the proceeds of the suit.

The act also permits the government to intervene and take over the lawsuit, as it did in this case as to some of Baklid-Kunz’s allegations. Baklid-Kunz will receive $20.8 million of the settlement.

Decade of fraud alleged
Allegations from the 47-year-old Baklid-Kunz say the medical center violated what is known as the “Stark Law.” This law prohibits physician referrals of designated health services (DHS) for Medicare and Medicaid patients if the physician (or an immediate family member) has a financial relationship with that entity.

She alleges that she witnessed more than a decade of billing fraud, unnecessary hospital admissions, inappropriate spinal surgeries and illegal kickbacks to doctors.

The Justice Department allegations involved contracts with six oncologists and payments to three neurosurgeons, according to a news release issued by the department.

“Patients deserve to know that recommendations are based on sound medical practice, not illegal financial relationships between providers,” said Inspector General for the U.S. Department of Health and Human Services Daniel R. Levinson in a prepared statement.

“Halifax now also is required to hire a legal reviewer to monitor provider arrangements and an additional compliance expert to assist the board in fulfilling its oversight obligations. Both of these independent reviewers will submit regular reports to my agency.”

Quick payment, no admission
According to a statement from Halifax Hospital, the payment of $85 million will be made within 10 days of the settlement. The hospital also has agreed to operate under a five-year Corporate Integrity Agreement. The agreement includes oversight of all physician contracts and assurance that compliance programs meet all of the government’s laws, rules and regulations.

The settlement does not include any admission of fraud, and the judge has determined that there were no violations of the federal anti-kickback statute by the hospital, medical oncologists or neurosurgeons.

“We believe we have a fiduciary responsibility to avoid the risks associated with trial and the potential of a lengthy appeals process,” Tangela Boyd, spokesperson for Halifax Hospital Medical Center, said in the prepared statement. “We will continue our mission of providing exceptional patient care and providing health and wellness services to our community as the only safety net hospital in the area.”

Trial averted
In a Nov. 13, 2013 ruling, the U.S. District Court for the Middle District of Florida ruled that Halifax’s contracts with its medical oncologists violated the Stark Law. The case was set for trial on March 3, 2014, on the government’s remaining claims against Halifax when the parties reached this settlement.

“This settlement illustrates our firm commitment to pursue health care fraud,” said U.S. Attorney for the Middle District of Florida A. Lee Bentley III.  “Medical service providers should be motivated, first and foremost, by what is best for their patients, not their pocketbooks. Where necessary, we will continue to investigate and pursue these violations in our district.”

“It is vital our community understands that all the patient services involved in this case were medically necessary and billed at the appropriate rate,” Boyd explained. “This case was narrowly focused on the contracts used to pay mission-critical cancer specialists and neurosurgeons to provide life-saving care to patients.”

Amid the allegations and settlement, Boyd asserts that Halifax Hospital continues to provide highly specialized care to those in the community, services she says that are “often not available elsewhere and enhance the health and well-being of all.”


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