Tennessee based HCA, Inc, a for-profit hospital chain,
recently agreed to pay $16.5 million to settle a qui tam action alleging it
violated federal law by illegally providing financial incentives to physicians
to refer patients to its facilities.
Specifically, HCA was accused of entering into unreasonable commercial
transactions with physician groups in a position to refer patients to HCA's
facilities, including leasing office space from a physician group at a
commercially unreasonable and excessive rate.
HCA had hired a third party to perform an appraisal but had ultimately
agreed to pay rental rates in excess of the appraised fair market value. The individual appraiser filed the qui tam
action in which the government later intervened.
This case is
an important reminder that every transaction with a potential referral source
must be commercially reasonable and any remuneration consistent with fair market
value. Even one transaction found to be in excess of fair market value can give
rise to significant civil and criminal penalties.
As attorneys we frequently advise providers
to obtain appraisals and fair market value opinions for transactions with potential
referral sources. This case shows the
importance of ensuring the ultimate transaction conforms to the appraisal. While providers may disagree with an appraisal
or valuation, these disagreements should be discussed and resolved with the
appraiser prior to entering into the transaction. If the appraiser is ultimately not convinced
that his/her determination is flawed, the provider should avoid proceeding with
a transaction that does not conform to the underlying appraisal or explore alternatives
with legal counsel such as hiring additional independent appraisers to provide
second and third opinions.
information regarding the HCA settlement can be viewed at http://www.justice.gov/opa/pr/2012/September/12-civ-1133.html