U.S. Attorney Announces $6.8 Million Settlement With New York-Presbyterian Hudson Valley Hospital For Paying Kickbacks To A Westchester Oncology Practice In Order To Obtain Referrals

 

New York-Presbyterian Hudson Valley Hospital Repeatedly Paid Remuneration to a Westchester Oncology Practice That Referred Medicare and Medicaid Patients to the Hospital Without a Proper Justification for Such Payments

United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services Office of the Inspector General (“HHS-OIG”), Naomi D. Gruchacz, announced today that the United States has filed and settled a healthcare fraud lawsuit against NEW YORK-PRESBYTERIAN HUDSON VALLEY HOSPITAL (“NYPHV”), which, prior to 2015, was known as Hudson Valley Hospital Center (“Hudson Valley”).  The settlement resolves allegations that NYPHV improperly paid millions of dollars to a Westchester-based oncology practice (the “Oncology Practice”) to induce patient referrals to the hospital, which NYPHV then billed to Medicare and Medicaid. 

Specifically, the Complaint alleges that in 2011 and 2012, NYPHV entered into three contracts with the Oncology Practice.  Together, those contracts provided that NYPHV would pay hundreds of thousands of dollars per year to the Oncology Practice in exchange for, among other things, work on a proposed melanoma center (the “Melanoma Center”), work on a proposed breast cancer center (the “Breast Center”), and the development and management of an intraoperative radiation therapy service line (the “IORT Service Line” and, collectively, with the agreements concerning the Melanoma Center and the Breast Center, the “Agreements”).  After entering into the Agreements, Hudson Valley and NYPHV subsequently made millions of dollars in payments to the Oncology Practice.  But in reality, many of these payments were not made in exchange for the services identified in the Agreements.  Instead, the Oncology Practice frequently failed to perform or document the central services identified in the Agreements.  All the while, NYPHV continued to receive referrals from the Oncology Practice that generated millions of dollars in reimbursements from Medicare and Medicaid. 

Under the settlement approved today by U.S. District Judge Nelson S. Román, NYPHV agreed to pay a total sum of $6,836,764.30 plus interest, with $6,469,410.32 to be paid to the United States and the remainder to be paid to New York State.  As part of the settlement, NYPHV also admitted and accepted responsibility for certain conduct alleged by the Government in its complaint, including that NYPHV paid the Oncology Practice over $4 million pursuant to the Agreements for work that was either not performed or not performed as called for in the Agreements, or for which NYPHV lacks any time records. 

“Hospitals and physicians are expected to make medical decisions based on the needs of their patients, not improper financial arrangements,” said U.S. Attorney Jay Clayton.  “When hospitals provide improper payments to induce patient referrals, they compromise the integrity of federal healthcare programs that serve New Yorkers.  We cannot afford corruption in our healthcare industry.” 

“Violations of the Anti-Kickback Statute, like those alleged in this case, can improperly influence referral decisions and undermine the integrity of federal health care programs,” said HHS-OIG Special Agent in Charge Naomi D. Gruchacz.  “HHS-OIG is committed to safeguarding the integrity of federal health care programs and ensuring that provider decisions are not compromised by inducements.”

As alleged in the Government’s Complaint:

In 2011 and 2012, NYPHV entered into the three Agreements with the Oncology Practice.  The Agreements provided, respectively, that NYPHV would pay the Oncology Practice an annual fee in exchange for, among other things: one of the Oncology Practice’s physician principals (“Physician A”) serving as the Medical Director of a proposed Melanoma Center at the hospital (the “Melanoma Directorship Agreement”); the Oncology Practice’s other physician principal (“Physician B”) serving as the Medical Director of a proposed Breast Center at the hospital (the “Breast Center Directorship Agreement”); and the Oncology Practice developing, managing, marketing, and integrating the IORT Service Line as part of the hospital’s Department of Radiation Oncology (the “IORT Management Services Agreement”).  Each of the three Agreements expired in 2016.

By October 2016 at the latest, NYPHV was, or at minimum should have been, aware that the Oncology Practice was performing only a portion of the work called for under the IORT Management Services Agreement and was not performing the majority of the work being called for under the Melanoma Directorship Agreement.  In addition, despite the fact that all of the Agreements expired in 2016, NYPHV continued to pay the Oncology Practice the fees in the Agreements through 2019.

All told, between January 2011 and December 2019 (the “Covered Period”), NYPHV paid over $4 million in fees to the Oncology Practice in connection with the Agreements—including payments for work that was not performed—to induce the Oncology Practice to refer its patients to NYPHV for oncology-related medical services in violation of the Anti-Kickback Statute and the Stark Law.  As a result of this conduct, NYPHV submitted false claims for payment to Medicare and Medicaid for services provided to these patients in violation of the False Claims Act.

Under the settlement, NYPHV admitted, among other things, that:

• Between 2011 and 2019, Hudson Valley and NYPHV together paid the Oncology Practice over $4 million pursuant to the Agreements for work that was either not performed, not performed as called for in the Agreements, or for which NYPHV lacks any time records.  The Oncology Practice was required to submit these records to Hudson Valley, and later NYPHV, under the Melanoma and Breast Center Directorship Agreements.
• By October 2016, NYPHV was, or at minimum should have been, aware that the Oncology Practice was performing only a portion of the work called for under the IORT Management Services Agreement and was not performing the majority of the work being called for under the Melanoma Directorship Agreement.  Nevertheless, NYPHV continued paying the Oncology Practice its fees under each of these agreements for another three years.
• The Oncology Practice and Physician A never developed or established the Melanoma Center as envisioned by the Melanoma Directorship Agreement and, accordingly, Physician A did not perform the primary duties of a Medical Director as envisioned by the Melanoma Directorship Agreement.  Further, at least by 2012, Physician A did not provide 50 hours of work per month toward developing or establishing the Melanoma Center and NYPHV was unable to identify any time records from the Covered Period documenting Physician A’s or their designee’s work related to the Melanoma Directorship Agreement.

In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had previously been filed under seal pursuant to the False Claims Act.

Mr. Clayton praised the outstanding investigative work of HHS-OIG.