South Carolina Health System Settles For $36.5 Million

Sarasota, FL (WorkersCompensation.com) – St. Francis healthcare system has agreed to pay out $36.5 million to settle allegations of violating the False Claims Act, the Federal Stark Law, and the Federal Anti-Kickback Statute, according to a recent press release from the South Carolina U.S. Attorney’s office.

A Section 501(c)(3) charitable organization located around Greenville, South Carolina, the collective St. Francis Physician Services, Inc., St. Francis Hospital, and Bon Secours St. Francis Health System agreed to pay out the settlement after one of its former physicians initiated a lawsuit in 2018. According to a recent report from Fox News, orthopedic surgeon Daniel Lee, MD served as chief of orthopedics, and filed the lawsuit after allegedly witnessing surgeons from Piedmont Orthopedic Associates exerting an unfair advantage within St. Francis healthcare system.

According to the Fox report, Piedmont Orthopedic Associates (POA) posed competition for the St. Francis hospital system. As such, the whistleblower lawsuit filed by Lee alleged that St. Francis developed a strategy to lure in POA surgeons into becoming employees of the hospital by paying them excessive salaries, which also included an annual referral bonus pool. Generating an enormous amount of referrals, the whistleblower alleged that if the total net loss was less than $3.95 million annually, the hospital would pay the POA surgeons an additional $3.95 million bonus to distribute amongst themselves. The lawsuit also asserted that the physicians were incentivized to order other ancillary services, including physical therapy, radiology, and labs in a play to keep costs low and increase their annual bonus.

Allegedly, the referral bonus program started in 2008. In 2014, several physicians included in the lawsuit made more money than 90 percent of orthopedic surgeons across the country, yet their revenue collection rate ranked in the bottom 25 percent nationally.

As a result of these alleged referral agreements, claims were filed to federal programs, thus violating the false claims act. U.S. Attorney Adair F. Boroughs for the District of South Carolina expressed his thoughts of bonus referrals stating, “Medical providers should base health care decisions on what is best for the patient, and not on financial incentives and related schemes.”

Represented by both the Law Offices of Bill Nettles and Law Offices of Bryan A. Vroon, LLC, Lee received approximately $10.2 million of the settlement.

According to the Fox report, the hospital system has denied the claims, stating that the employment agreements that were brought forward in the lawsuit have not been used in years. In a statement to Becker’s Orthopedic Review, St. Francis stated they are moving forward to "place our focus where it belongs — continuing to compassionately serve patients and communities by providing the high-quality, mission-centric care that our community has come to expect without the disruption this kind of litigation can pose."

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