Justice Department Files False Claims Act Complaint Against Erlanger; Hospital To Vigorously Defendh System

  • Monday, July 29, 2024

The United States has filed a complaint against Murphy Medical Center, Inc. and Erlanger Health System alleging that Erlanger submitted false Medicare claims.

It was filed in Federal Court for the Western District of North Carolina.

The government alleges that Erlanger, a health care system located in Tennessee and North Carolina, violated the Stark Law.

Erlanger said it will vigorously defend against the lawsuit.

Officials said, "Erlanger paid physicians based on amounts that outside experts advised was fair market value. Erlanger did not pay for referrals. A complete picture of the facts will demonstrate that the allegations lack merit and tell a very different story than what the government now claims." 

The Stark Law prohibits a hospital from billing Medicare for services referred by a physician with whom the hospital has an improper financial relationship that does not meet any statutory or regulatory exception. The government’s complaint alleges that Erlanger had employment relationships with a number of physicians that did not meet any Stark Law exception because the compensation Erlanger paid to the physicians was well above fair market value. The complaint alleges that Erlanger received referrals from these physicians in violation of the Stark Law and submitted claims to Medicare knowing that the claims for those referred services were not eligible for payment.

“Improper financial relationships between hospitals and physicians threaten the integrity of clinical decision-making and can influence the type and amount of health care that is provided to patients,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to ensuring that physicians’ treatment decisions are based on the needs of their patients and not their own financial interests.”

“The government’s complaint alleges that Erlanger compromised Stark Law compliance to boost its financial standing, knowingly overpaying physicians whose practices generated profits for the hospital,” said U.S. Attorney Dena J. King for the Western District of North Carolina. “We are dedicated to enforcing the Stark Law and protecting patients and the Medicare program from financial relationships that undermine public trust and incentivize overbilling and waste of taxpayer dollars.” 

“This complaint serves as a warning to health care entities that attempt to increase profits through improper financial arrangements with referring physicians,” said Special Agent in Charge Tamala E. Miles of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “HHS-OIG will continue to investigate such deals to prevent financial arrangements that could compromise impartial medical judgment, increase health care costs, and erode public trust in the health care system.” 

The United States filed its complaint in a lawsuit originally filed under the qui tam or whistleblower provisions of the False Claims Act, which allow private parties to file suit on behalf of the United States for false claims and to receive a share of any recovery. The Act permits the United States to intervene and take over the lawsuit, as it has done here in part. Those who violate the Act are subject to treble damages and applicable penalties.

Officials said, "The government’s intervention in this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act."

Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800-HHS-TIPS (800-447-8477).

The Justice Department’s Civil Division and the U.S. Attorney’s Office for the Western District of North Carolina handled the case, with assistance from HHS-OIG. The case is captioned United States of America, the State of North Carolina, and the State of Tennessee ex rel. Alana Sullivan and J. Britton Tabor v. Murphy Medical Center, Inc., et al. No. 1:21-CV-219-MR-WCM (W.D.N.C.).

Breaking News
Updated City Tree Ordinance Allows "Notable Trees" To Come Off The List At Owner's Request
  • 4/1/2025

An amended version of the city's updated tree ordinance allows owners of "Notable Trees" to have them taken off the list by notifying the city forester. Chris Anderson of the mayor's office, ... more

Latest Hamilton County Arrest Report
  • 4/1/2025

Here is the latest Hamilton County arrest report. (If your case is dismissed, just email us your name and date we ran it and we will promptly take off. Email to news@chattanoogan.com ) BELL,TERRY ... more

Tennessee Adds Saturday REAL ID Appointments Ahead Of Federal Implementation Date
  • 3/31/2025

With the federal REAL ID travel requirement taking effect on May 7, the Tennessee Department of Safety and Homeland Security will open 19 Driver Services Centers across the state on Saturday ... more