Beaumont Health will pay $84.5 million to settle long-standing lawsuits that allege improper contracts with referring physicians at three of Beaumont’s hospitals, in Royal Oak, Troy, and Grosse Pointe.
The lawsuits were filed by four former hospital administrators and physicians in 2011. They claimed that three of Beaumont's hospitals were giving free office space and payments to doctors who referred Medicare and Medicaid patients to Beaumont. That's a violation of a federal anti-kickbacks law that bans such payments.
The improper payments took place between 2004 and 2012, two years before the hospitals became part of a new health system called Beaumont Health.
“Offering financial incentives to physicians in return for patient referrals undermines the integrity of our health care system,” says Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Divison. “Patients deserve the unfettered, independent judgment of their health care professionals.”
The fine is nearly a quarter of the profit the health system made in 2016. $82.74 million of the settlement will go to the United States, and $1.76 million to the State of Michigan. The government says the whistleblower plaintiffs will get a share of the settlement, but the amount has not yet been awarded.
As part of the settlement, Beaumont will also undergo a special audit for five years.
Beaumont says while the incentives were improper, the services the patients received were necessary and the scheme didn't affect patient care.