CoxHealth to pay $60M to settle claims it paid doctors kickbacks

Tuesday, July 22, 2008 | 10:09 p.m. CDT

KANSAS CITY — A Springfield-based health care system has agreed to pay $60 million to settle claims it engaged in illegal kickbacks with doctors and billed Medicare for costs not allowed under federal laws.

The Lester E. Cox Medical Centers will pay $35 million immediately and pay the remainder in annual $5 million installments over five years, plus interest.

The company has also agreed for five years to allow inspectors with the U.S. Department of Health and Human Services to ensure it is complying with federal health care benefit program requirements.

CoxHealth is not admitting any wrongdoing but said it settled to avoid the continued expense of litigation and the potential of having to pay an even larger amount to the government, which the company said would have likely forced the hospital network to shut down.

“The settlement revolves around potential errors made by Cox many years ago in interpreting highly complex Medicare billing regulations and in structuring business relationships with physicians,” CoxHealth Chief Executive Officer Robert H. Bezanson said, noting that none of the allegations pointed to improper treatment of patients. “In almost every instance of what is included in the settlement, the issues were identified by hospital administration and the results of our review were reported to the government.”

Federal prosecutors have alleged the company, beginning in January 1996, entered into an agreement with physician group Ferrell-Duncan Clinic Inc. where it offered financial incentives for doctors at the clinic to refer patients to Cox Medical Centers. Such arrangements are prohibited under anti-kickback laws.

The company also is accused of submitting fraudulent Medicare reimbursement requests involving disallowed clinic costs between January 1997 and March 25, 2005. In addition, the government alleges two clinics controlled by Cox, Ozark Dialysis Services and Cox HPS of the Ozarks Inc., submitted improper claims to Medicare for end-stage renal disease treatments provided to patients between January 1999 and December 2004.

“Today’s settlement furthers both our commitment to protecting patients from improper billing practices and the continued ability of Cox to provide quality medical care in Springfield and the Ozarks,” said U.S. Attorney John Wood for the Western District of Missouri in a release. “I am pleased that we were able to resolve this matter without litigation.”

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