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Medical Center Self-Disclosure Led to a Resolution with DOJ

On July 7, 2022, The Department of Justice ("DOJ") announced that Weirton Medical Center (WMC), a 167-bed hospital located in Weirton, West Virginia, has agreed to pay $1.5 million to resolve allegations of submitting Medicare claims in violation of the False Claims Act (FCA) and the Physician Self-Referral law (Stark Law). While similar cases are commonly brought about by whistleblowers under qui tam provisions, in May 2019, WMC voluntarily self-disclosed to the United States Attorney's Office for the Northern District of West Virginia that it had begun an internal investigation into possible violations of the Stark law.

The internal investigation, conducted through a third party, identified existing financial arrangements with physicians that potentially violated the FCA and the Stark Law. The DOJ press release noted that the settlement amount took into consideration WMC's financial condition and highlighted that the resolution stemmed from WMC's voluntary self-disclosure, suggesting that the DOJ took favorably to the show of integrity when resolving the matter.

As presented in the settlement agreement, during the period from March 1, 2012, to May 30, 2019, WMC allegedly submitted claims to Medicare for designated health services referred by its physicians with whom WMC had financial relationships that potentially did not satisfy the requirements of any applicable exemptions to the Stark Law. The DOJ also claims evidence that the compensation allegedly paid to the physicians exceeded fair market value and/or took into account the volume or value of the physicians' referrals of designated health services to WMC.

While there has been no determination of liability, under the settlement agreement, WMC agreed to pay the United States $1.5 million no later than seven days after the agreement's effective date. Upon receipt of the settlement amount, the United States will release WMP from any related civil or administrative monetary claims.

BFMV specializes in the valuation of healthcare businesses, assets, and services. Contact us for third-party opinions or questions regarding fair market value compensation for physician services.


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