St. Mary’s parent organization settles kickback probe

The same nonprofit health system that operates St. Mary’s Hospital agreed to pay part of a $3.85 million settlement to resolve claims it violated federal anti-kickback laws, the U.S. Department of Justice announced Tuesday.

Sisters of Charity of Leavenworth Health System will participate in the settlement after a hospital it operates in Butte, Mont., was accused of engaging in an unlawful partnership agreement with a group of Butte doctors.

The discovery of suspected wrongdoing came after an internal investigation was conducted by St. James Healthcare in Butte, one of nine hospitals the Sisters of Charity operates.

“In 2009, we ... found some discrepancies in a 2005 partnership agreement between a group of physicians and St. James Healthcare,” St. James Healthcare CEO Chuck Wright said in a news release. “As part of our commitment to integrity and compliance, we engaged outside experts to conduct an independent review.” 

Following completion of the review, St. James and the Sisters of Charity contacted the U.S. Attorney’s Office for the District of Montana to disclose the findings.

“We cooperated fully throughout the government’s review and have finalized a settlement of $3.85 million with the Department of Justice to resolve this matter,” Wright said.

The claims settled by the agreement are allegations only, and there was no determination of liability, the Justice Department said. St. James Healthcare and the Sisters of Charity allegedly violated the Anti-Kickback Statute, the Stark Law and the False Claims Act by improperly providing financial benefits to physicians and physician groups that made referrals to the hospital, the Justice Department said.

These incentives included payment to the doctors that increased the value of their shares in a joint venture with the hospital and resulted in below fair market value lease rates for the physicians renting space in a medical office building. 

Additional incentives provided by St. James and Sisters of Charity included below fair market value lease rates for land upon which the medical office building was built and other below fair market value arrangements related to shared facilities, use and maintenance, the Justice Department said.

“We are encouraged that hospitals like St. James Healthcare are taking these issues seriously by reviewing their operations and making disclosures to the government where necessary,” said Michael W. Cotter, U.S. Attorney for the District of Montana. “It is important to note that patient care was not affected by the discrepancies found in the partnership agreement nor has patient care been affected throughout the settlement period,” Wright said.

“We have a robust compliance program and are committed to complying with all health care laws. We have implemented more stringent processes to avoid any future issues related to partnerships between St. James and physicians or physician groups,” he said.

St. James Healthcare, like St. Mary’s, is one of nine hospitals in four states operated by the Sisters of Charity, St. Mary’s spokeswoman Kim Williams referred questions about the recent settlement to officials at the Montana hospital.

The originator of the nonprofit, faith-based health system established a 10-bed, wooden-frame hospital known as St. Mary’s in Grand Junction on May 22, 1896.


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Kickbacks?  I wonder why health care costs are rising?  Must be Obama or something.

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