The United States Department of Justice (DOJ) recently announced a nearly $8.9 million settlement with Oliver Street Dermatology Management, LLC, resolving self-reported allegations of possible violations of the Physician Self-Referral Law (the Stark Law) and the Anti-Kickback Statute (AKS).
The settlement is for a total of $8,892,079.72, with $5,928,053.15 of the total amount in restitution. The settlement did credit Oliver Street for its self-disclosure and cooperation with government investigators. In this case, the self-disclosure came at a time when the conduct was unknown to the United States and was specific to the nature of the potentially problematic transactions, the personnel involved, and the potential financial impact on the Government. The total settlement is essentially one and a half times the amount the government believed was due to improper billing.
According to the settlement agreement and DOJ announcement, between January 2013 and July 2018, Oliver Street acquired numerous dermatology practices throughout the United States as U.S. Dermatology Partners. In September 2021, the company self-disclosed to the DOJ that it discovered credible evidence that former senior managers may have offered (or agreed) to increase the purchase price of 11 of the acquired dermatology practices in exchange for an agreement that the provider of the practice would refer services to entities affiliated with U.S. Dermatology Partners after it was acquired. Claims for at least some of those referred services were subsequently submitted to Medicare for payment. The specific nature and extent of the referral incentives are unclear at this time.
Under the Stark Law, healthcare entities are not allowed to bill for certain services that are referred by physicians with whom the entity has a financial relationship, unless the relationship satisfies an exception in the law or regulations. The Anti-Kickback Statute prohibits offering or paying remuneration for the purposes of a referral of items/services covered by Medicare and other federally funded health care programs. Both laws are intended to prevent health care judgments from being compromised by any improper financial inducements.
“Decisions about where medical specimens are analyzed should be made with the best interests of patients, not providers, in mind,” said U.S. Attorney Leigha Simonton, who announced the settlement. “We applaud this company for self-reporting its potential violations and cooperating with government investigators, allowing us to reach a swift settlement.”
Importantly, the claims resolved in the settlement are still only allegations as no determination of liability has been made.