- Associated Press - Wednesday, September 19, 2012

NASHVILLE, TENN. (AP) - The Justice Department and HCA have reached a $16.5 million settlement over violations of federal laws that restrict financial relationships between hospitals and physicians.

The case arose after two subsidiaries of the Nashville-based hospital chain gave financial benefits to Diagnostic Associates of Chattanooga, a physicians group, in an effort to get more patient referrals to HCA facilities, the Justice Department said in a news release Wednesday.

The financial transactions in 2007 involved HCA Physician Services in Nashville and Parkridge Medical Center in Chattanooga. Officials said rental payments for offices leased from the physicians group exceeded fair market value, and members of the physician group were released from a separate lease obligation.

Federal law prohibits the payment of medical claims that result from financial relationships between hospitals and the physicians who may refer patients to them.

“Physicians should make decisions regarding referrals to health care facilities based on what is in the best interest of patients without being induced by payments from hospitals competing for their business,” said Bill Killian, U.S. Attorney for the Eastern District of Tennessee, in a prepared statement.

Kathy Winn, a spokeswoman for Parkridge Health System, said in a prepared statement, “We are pleased the matter is concluded, and we will diligently fulfill the terms of the corporate integrity agreement.”

The case arose from a whistleblower lawsuit filed in East Tennessee. The whistleblower will receive an 18.5 percent share of the settlement money.

The settlement requires Parkridge to hire an independent organization to review its business arrangements and transactions and work with the Office of Inspector General of the U.S. Department of Health and Human Services to ensure compliance with federal laws.

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