Covenant pays $4.5 million to settle health care fraud allegation - KWWL - Eastern Iowa Breaking News, Weather, Closings

Covenant pays $4.5 million to settle health care fraud allegation


WATERLOO (KWWL) - Covenant Medical Center in Waterloo has agreed to pay the United States $4.5 million to settle allegations of health care fraud relating to the center's financial relationships with five doctors, United States Attorney Matt M. Dummermuth and the Department of Justice announced Tuesday.

This settlement resolves allegations that Covenant Medical Center submitted false claims to Medicare by engaging in financial relationships with five physicians that were prohibited under the Stark Law. The Stark Law prohibits a hospital from profiting from referrals of patients by a physician when the hospital and physician have an improper compensation arrangement. An arrangement is improper if a physician is paid above fair market value for their services and that compensation is not commercially reasonable. The purpose of the Stark Law is to ensure physicians' medical judgments are not compromised by improper financial incentives and are
based solely on the best interests of the patient.

The United States alleged Covenant violated the law by paying commercially unreasonable compensation far above fair market value to five employed physicians who referred their patients to Covenant for treatment. These physicians were among the highest paid hospital-employed physicians not just in Iowa, but in the entire United States.

In a settlement agreement, Covenant denied any wrongdoing but agreed to pay the United States $4.5 million plus interest to settle the government's claims. Covenant believes the government did not produce any evidence that Covenant had engaged in wrongdoing or illegal conduct.  Officials at Covenant Medical Center say they made a business decision to settle to avoid the uncertainty of litigation, disruption, and high expense associated with protracted litigation with the government, despite their belief that Covenant's compensation to its physicians was reasonable and fell within fair market value.

"This payment is the largest ever related to claims of health care fraud in the Northern District of Iowa," said Dummermuth. "We are actively working with our investigative partners to ensure Medicare funds are properly spent, and we will continue to aggressively pursue all types of fraud in order to protect federal health care dollars."

Online Producer: Jason Mortvedt

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