By John P. Krave and M. Steven Lipton Earlier this month, a grand jury in the United States District Court for the Southern District of California indicted Barry Weinbaum, CEO, Alvarado Hospital Medical Center in San Diego, on eight counts of violating the federal anti-kickback law by authorizing payments to referring physicians pursuant to allegedly fraudulent practitioner recruitment agreements and engaging in other illegal practices. The case has potentially broad implications because it suggests that the widespread strategy of recruiting new physicians into a community through the use of "host" physicians or medical groups may expose hospitals to criminal charges. Hospitals and physicians should examine their own recruitment activities to mitigate legal risks in view of this aggressive interpretation of the federal anti-kickback statute and related regulations adopted by the United States Attorney prosecuting the Weinbaum matter. According to the indictment, Mr. Weinbaum arranged for payment of more than $10 million in relocation packages to doctors who joined medical groups (i.e., "host physicians") in the Medical Center's service area. It is alleged that much of the money retained by the host physicians was in exchange for referring business to the Medical Center. The indictment alleges that Mr. Weinbaum assisted in the recruitment of at least four physicians who affiliated with the practice of Dr. Paul Ver Hoeve and that with the Medical Center's knowledge, the recruited practitioners "kicked back" to Dr. Ver Hoeve at least $600,000 of these payments. In exchange for this remuneration, Dr. Ver Hoeve allegedly arranged for the referral of patients to the Medical Center. The government's theory, however, is undercut by the fact that Dr. Ver Hoeve did not admit a significant number of patients to the Medical Center. Moreover, Dr. Ver Hoeve's testimony was the primary, but not exclusive, evidence against Mr. Weinbaum. The government's reliance on Dr. Ver Hoeve is further undermined because he was indicted in 1998 on 64 counts of mail fraud related to a scheme to defraud the Medicare program. In 2000, Dr. Ver Hoeve plead guilty to a single count of Medicare fraud, contingent on the promise to cooperate in future investigations. Officials of Tenet (the owner of the Medical Center) have asserted that Dr. Ver Hoeve avoided jail time in his own case in exchange for his agreement to testify against Mr. Weinbaum. According to some accounts, the Medical Center...
Hospital CEO Indicted For Recruitment Fraud Scheme
|Profession:||Davis Wright Tremaine|
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