November 7, 2012
On Monday, Nov. 5, 2012, the Department of Justice (DOJ) announced that Freeman Health System (Freeman) in Joplin, Missouri, had agreed to pay $9.3 million to resolve allegations that it violated the False Claims Act and Stark Law by contracting with physicians to provide incentive pay based on referrals. The parties reached the agreement after Freeman voluntarily disclosed possible violations to the U.S. Attorney for the Western District of Missouri following its internal audit of physician contracts. By initiating an internal review of its contracts and disclosing the information to the DOJ, Freeman likely avoided more severe penalties, including a corporate integrity agreement and liability under the False Claims Act.
In this case, Freeman’s actions raise three important points for hospitals: