GRAND RAPIDS’ METROPOLITAN HOSPITAL & RELATED ENTITIES
TO PAY U.S. $6.25 MILLION TO RESOLVE FALSE CLAIMS ALLEGATIONS

WASHINGTON, D.C. - Metropolitan Hospital, an acute care facility in Grand Rapids, Michigan, and several related entities will pay the United States $6.25 million to settle allegations that they submitted false claims to Medicare, the Department of Justice announced today. The settlement resolves allegations that from 1995 through 2003 the hospital engaged in financial relationships with various physicians that were prohibited under the federal Stark anti-kickback statute, and subsequently received Medicare reimbursement for patients referred to the hospital by those physicians.

Specifically, the settlement focuses on the compensation Metropolitan paid to vascular surgeons, which the United States contends exceeded fair market value; the hospital's lease of office space to two primary care physicians, which the government contends was leased below fair market value at terms that were not commercially reasonable; and the purchase by the hospital of the practice of a primary care physician in 1996. The settlement also resolves the United States' allegations that the hospital submitted wound care and detoxification claims that were unsubstantiated by the medical records, and that a hospital affiliate submitted Medicare claims for services provided by an employed primary care physician that were unsubstantiated by the medical records.

“This settlement reflects the importance the Department places on compliance by all health care providers with the law, including those statutes governing financial relationships between hospitals and physicians,” said Peter D. Keisler, Assistant Attorney General for the Justice Department’s Civil Division. “We will continue to protect the Medicare program against potential fraud and abuse.”

The allegations arose from a lawsuit filed in 2002 by Mary Scott, a former vice president of a Metropolitan affiliate. As a result of the settlement, Scott will receive $1.125 million. Under the qui tam or whistleblower provisions of the False Claims Act, a private person is allowed to sue on behalf of the United States and share in any recovery. The settlement also resolves issues presented by Metropolitan and its affiliates in a self disclosure to the Department of Health and Human Services, Office of Inspector General, in June 2002.

The case was handled by the Civil Division of the Department of Justice, with assistance from the United States Department of Health and Human Services, Office of Inspector General, Office of Investigations; the United States Postal Service, Office of Inspector General; and the Federal Bureau of Investigation.

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