Opinion ID: 2746816
Heading Depth: 1
Heading Rank: 3

Heading: stark and anti-kickback statutes

Text: In its most general terms, the Stark statute prohibits doctors from referring Medicare patients to a hospital if those doctors have certain specified types of “financial relationships” with that hospital. See 42 U.S.C. § 1395nn(a)(1)(A). And, in turn, the Stark statute prohibits that same hospital from presenting claims for payment to Medicare for any medical services it rendered to such referred patients. See id. § 1395nn(a)(1)(B). Although the Stark statute broadly defines “financial relationships,” the statute contains numerous exceptions to that definition. See id. § 1395nn(a)(2); id. 8 Case: 13-11859 Date Filed: 10/30/2014 Page: 9 of 41 § 1395nn(b)–(e) (listing exceptions to the broad definition of “financial relationship” such as “bona fide employment relationships”). For the limited purposes of their motion to dismiss, the Defendants do not argue that an exception to the Stark statute’s broad definition of “financial relationship” applies to the financial-referral incentives alleged in Mastej’s complaint. Rather, the Defendants concede that the complaint’s factual allegations about the neurosurgeon payments and golf benefit—taken as true at this motion-todismiss stage—satisfy the Stark statute’s definition of “financial relationship” between a doctor and a hospital. Where such a Stark-defined “financial relationship” exists—as the Defendants concede for the purposes of their motion to dismiss—a doctor “may not make a referral to the [hospital],” and the hospital “may not present or cause to be present[ed] a [Medicare] claim.” See id. § 1395nn(a)(1). For purposes of this motion, the Defendants also do not contest that they could not seek Medicare reimbursement for medical services (even though actually rendered to patients) if those patients were referred by doctors in exchange for the particular financial incentives alleged in the complaint. 9 Case: 13-11859 Date Filed: 10/30/2014 Page: 10 of 41
Generally speaking, the Anti-kickback statute prohibits a hospital from financially inducing a person to refer a Medicare patient. See 42 U.S.C. § 1320a7b(b). Relevant to this case, the Anti-kickback statute forbids knowingly “offer[ing] or pay[ing] any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person . . . to refer an individual [for medical services] for which payment may be made in whole or in part under a Federal health care program” such as Medicare. Id. § 1320a-7b(b)(2)(A) (emphasis added); see also id. § 1320a7b(b)(3) (providing exceptions to this general rule). A violation of the Anti-kickback statute occurs when the defendant (1) knowingly and wilfully, (2) pays money, directly or indirectly, to doctors, (3) to induce the doctors to refer individuals to the defendants for the furnishing of medical services, (4) paid for by Medicare. See United States v. Vernon, 723 F.3d 1234, 1252 (11th Cir. 2013) (setting forth the elements of an Anti-kickback statute violation under § 1320a-7b(b)(2)(A)). Again, Mastej acknowledges that the Defendants provided necessary medical services to the referred patients, but he claims that the Defendants were prohibited from seeking any Medicare reimbursement at all because the 10 Case: 13-11859 Date Filed: 10/30/2014 Page: 11 of 41 Defendants gave payments or a golf-trip benefit to induce the referrals in violation of the Anti-kickback statute. We next outline the complaint’s allegations about those financial incentives. IV. TWO FINANCIAL-INCENTIVE SCHEMES FOR REFERRALS A. “On-call” Neurosurgeon Scheme in 2007-2009 Doctors at the Medical Center’s Collier Boulevard and Pine Ridge facilities performed, among other things, neurosurgery services that were scheduled well before being performed. As alleged, Collier Boulevard and Pine Ridge did not offer emergency or un-planned neurosurgery services. 7 To the extent that an existing or prospective patient required emergency neurosurgery, the Medical Center would refer that patient to another hospital. Thus, Collier Boulevard and Pine Ridge allegedly had no need for neurosurgeons to serve in “on-call” capacities. Both locations maintained sufficient other “on-call” coverage without the need for neurosurgeons to be “on call” for planned surgeries. Nevertheless, according to Mastej’s complaint, the Medical Center’s Pine Ridge location maintained a pay-for-referral scheme to pay certain neurosurgeons 7 The complaint states that Pine Ridge did not offer emergency neurosurgery from at least 2007 to 2009. 11 Case: 13-11859 Date Filed: 10/30/2014 Page: 12 of 41 ostensibly to be “on call” to perform emergency or un-planned neurosurgery services, even though doctors at that location did not perform such services. The CEO of the Medical Center’s Pine Ridge facility (Geoff Moebius) negotiated “on-call” coverage contracts with several neurosurgeons. In January 2007, Drs. Michael Lusk, John Drygas, Mark Gerber, Gary Colon, and Paul Dernbach entered into “on-call” neurosurgery contracts. In 2009, Dr. Rick Bhasin entered into a similar “on-call” contract. Pursuant to the “on-call” contracts, the Medical Center paid these six neurosurgeons $1,000 per weekday of “on-call” coverage and $2,000 per weekend day of “on-call” coverage. These payments for “on-call” coverage to the six neurosurgeons “were significantly above the fair market value for the services these neurosurgeons provided.” 8 During the time that Mastej was CEO of the Medical Center’s Collier Boulevard facility (February through October of 2007), Geoff Moebius (CEO of Pine Ridge) asked Mastej to split the cost of the neurosurgeon “on-call” contracts between Pine Ridge and Collier Boulevard. CEO Moebius told Mastej that the “on-call” contracts “were important to keep the neurosurgeons referring lucrative scheduled surgeries at Pine Ridge, including surgeries involving Medicare and 8 As of March 2012, Drs. Lusk, Gerber, Colon, and Bhasin allegedly continued to provide “on-call” coverage for Pine Ridge. 12 Case: 13-11859 Date Filed: 10/30/2014 Page: 13 of 41 Medicaid patients.” CEO Moebius said that “these neurosurgeons would begin referring scheduled surgeries to Collier Boulevard if [that location] shared in the cost of the call coverage.” Mastej refused to split the cost of the “on-call” neurosurgery contracts. The complaint alleges that these “on-call” neurosurgery contracts constituted prohibited “financial relationships” (within the meaning of the Stark statute) and illegal “remuneration” (within the meaning of the Anti-kickback statute) because Pine Ridge did not perform emergency neurosurgery services, did not need “oncall” neurosurgeons, and made the payments only as inducements or rewards for patient referrals. Second, the Medical Center paid the neurosurgeons significantly inflated amounts in relation to the “on-call” services provided. B. Defendants’ Golf-Trip Benefit in 2008 Mastej’s complaint also alleges that the Defendants flew several Naples, Florida doctors—at the Defendants’ expense and on Defendant HMA’s corporate jet—to an April 2008 golf tournament. The Defendants provided the doctors with free rental cars, tournament tickets, meals, and drinks. The Defendants “selected the physicians [for this 2008 trip] based on their ability and willingness to send patient referrals to HMA hospitals, particularly Collier Boulevard.” As alleged, the golf-trip benefit constituted a “financial relationship” (within the meaning of 13 Case: 13-11859 Date Filed: 10/30/2014 Page: 14 of 41 the Stark statute) and illegal “remuneration” (within the meaning of the Antikickback statute).9 The Defendants provided the 2008 golf trip to “generat[e] patient referrals, including Medicare and Medicaid patients.” CEO Moebius described the golf trip as a “once in a lifetime business development tool” for the Medical Center. Each flight had a single doctor and at least one hospital administrator, who discussed how the doctor could do additional business with HMA hospitals, in particular the Collier Boulevard location. Four doctors received the 2008 golf-trip benefit: (1) Dr. William Figlesthaler; (2) Dr. Aldo Beretta; (3) Dr. Morton Bertram; and (4) Dr. Rob Hanson. 10 However, Mastej does not allege these four doctors were involved in the “on-call” scheme or that he had any discussions with these doctors or any persons on the golf trip. Mastej does not allege the source for what was discussed on the trip or the source of the alleged Moebius quote. As alleged, the Defendants maintained a “Stark Log” to track any nonmonetary compensation paid to doctors who referred Medicare patients to the 9 Mastej contends that the “non-monetary compensation” exception in the Stark statute did not apply to the golf tournament trips because the value of each trip exceeded the statutorily permissible amount (i.e., $338) by more than fifty percent (i.e., the value of each trip was at least $507). 10 As alleged, the Defendants provided this golf trip one time during April 2008. Mastej does not allege that the Defendants provided similar trips to other golf events or at other times. 14 Case: 13-11859 Date Filed: 10/30/2014 Page: 15 of 41 Medical Center. The Defendants’ practice was to add a doctor to the Stark Log only after the doctor made a patient referral. The Defendants entered the name of each doctor who received the golf trip in the Medical Center’s Stark Log and recorded a below-market value on the golf-trip benefit. As to both the golf-trip benefit and on-call payments, Mastej’s complaint does not allege that the Defendants’ claims for reimbursement included the costs of their “pay-for-referral schemes”; rather, the Defendants’ claims covered only the costs of the actual medical treatment rendered to the referred patients. Mastej also does not allege that the six neurosurgeons or four golf-trip doctors treated the referred patients. What Mastej alleges is that the Defendants could submit no reimbursement claim at all for actual services rendered to any patients referred by the ten doctors, no matter who treated the patients, because those ten physicians received the alleged financial incentives for such referrals. As noted earlier, the Defendants—for purposes of the motion to dismiss—do not contest that the financial incentives were paid to the ten doctors as alleged. What the Defendants do contest, as explained later, is whether the complaint sufficiently alleges that the ten doctors actually referred patients, or that the Defendants submitted any false claim for any such referred patient, or that the government paid any such claim for any such referred patient. With this 15 Case: 13-11859 Date Filed: 10/30/2014 Page: 16 of 41 background about the financial incentives, we turn to the complaint’s allegations about the Medicare reimbursement process.