US-based Indian doctors to pay USD 37.5 million to settle allegations of kickbacks of patient referrals

Washington: Two Indian-American doctors and one of the largest hospital systems in the US have agreed to pay nearly USD 37.5 million to settle allegations of kickbacks for patient referrals, the Department of Justice said.

The settlement resolves allegations that Prime Healthcare Services system overpaid for California interventional cardiologist Dr Siva Arunasalam''s physician practice and surgery centre because the company wanted him to refer patients to its Desert Valley Hospital in Victorville, California, it said.

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The purchase price, which was substantially negotiated by Prime Healthcare Services founder and CEO Dr Prem Reddy, exceeded the fair market value and was not commercially reasonable, it said.

Prime also knowingly overcompensated the doctor when HDHVI entered into an employment agreement with him that was based on the volume and value of his patient referrals to the Desert Valley Hospital.

The United States and California entered into a settlement agreement with the Prime Healthcare Services, Dr Reddy, and Dr Arunasalam to resolve alleged violations of the False Claims Act and the California False Claims Act based on kickbacks paid by Prime to Dr Arunasalam for patient referrals, a media release said on Tuesday.

Under the settlement agreement, Dr Arunasalam will pay USD 2 million, Dr Reddy paid USD 1.7 million and Prime paid USD 33.7 million. Prime and Dr Reddy paid USD 65 million to settle previous unrelated allegations of false claims and overbilling in 2018, the Department of Justice said.

Acting Assistant Attorney General Brian M Boynton of the Justice Department''s Civil Division said, "Offering illegal financial incentives to physicians in return for patient referrals undermines the integrity of our healthcare system by denying patients the independent and objective judgement of their health care professionals."

"Doctors have a sworn duty to do no harm and to put their patients'' interests first," said Acting US Attorney Tracy L Wilkison for the Central District of California.

"Kickbacks designed to increase the number of patient referrals corrupt the doctor-patient relationship and needlessly waste this nation''s healthcare resources," he said. 

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