Alabama-based Infirmary Health System Inc. (IHS), two IHS-affiliated clinics, and Diagnostic Physicians Group P.C. (DPG) will pay $24.5 million to the U.S. government to settle claims that they paid or received financial inducements from Medicare payments in violation of the False Claims Act. According to the government’s complaint, the IHS-affiliated clinics and DPG violated the Physician Self-Referral Law (or the Stark Law) and the Anti-Kickback Statute when the two clinics–IMC-Diagnostic and Medical Clinic and IMC-Northside Clinic–paid DPG a percentage of Medicare payments for tests and procedures referred by DPG physicians.

Infirmary Medical Clinics P.C. (IMC), also named in the lawsuit, is an affiliate of IHS that owns and operates approximately 30 clinics, including the two clinics involved in this case. It is claimed that IMC purchased IMC-Diagnostic and Medical from DPG in 1988 and agreed to pay DPG a share of the clinic’s revenues, including Medicare revenues from diagnostic imaging and laboratory tests. The government also claims that IMC entered into similar agreements when it subsequently purchased IMC-Northside in 2008. Despite a warning by DPG’s lawyer in June 2010 of possible violations of the law, the agreement allegedly remained intact for another 18 months.

The allegations were originally raised in a whistleblower lawsuit filed by Dr. Christian Heesch, a former physician at DPG, who will receive $4.41 million as his share of the settlement.

Read the entire DOJ press release, “Alabama Hospital System and Physician Group Agree to Pay $24.5 Million to Settle Lawsuit Alleging False Claims for Illegal Medicare Referrals”