BUFFALO, N.Y. – U.S. Attorney Michael DiGiacomo announced today that Catholic Health System, Inc. (CHS) has agreed to pay $3,293,122.66 to resolve allegations arising under the False Claims Act that CHS knowingly submitted or caused to be submitted false claims to the Medicare program that were the result of violations of the Physician Self-Referral Law, commonly known as the Stark Law.

Generally, the Stark Law prohibits healthcare entities, such as hospitals, from obtaining reimbursement from Medicare for certain health services when those services were referred by a physician who have a financial relationship the healthcare entity. In this case, the Government alleges that CHS and its affiliated hospitals had financial relationships with non-employee physicians. These non-employee physicians then referred health services, such as laboratory testing, hospital services, or medical supplies, to CHS and its affiliated hospitals. CHS and its affiliated hospital then billed Medicare for the referred services. Although the Stark Law contains exceptions, here the government believes the compensation arrangements, failed to meet any of the exceptions because they were not commercially reasonable, or the compensation received by the physicians exceeded fair market value for the administrative services they provided.

“The Stark Law is designed to protect Medicare by ensuring that physician referrals are not influenced by financial interest,” stated U.S. Attorney DiGiacomo. “This office is committed to holding health care providers accountable who engage in such conduct.”

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Gary Tucker. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Tucker v. Catholic Health System, Inc., 20-cv-1482 (W.D.N.Y.). Mr. Tucker will receive a share of the settlement.

Assistant U.S. Attorney David M. Coriell and Investigator Margaret McFarland of the United States Attorney’s Office for the Western District of New York handled the matter, along with assistance for the Department of Health and Human Services, Office of Inspector General.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

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