The federal government intervened in a whistleblower lawsuit alleging that Methodist Le Bonheur Healthcare paid independent physicians more than $400 million for referrals.
Memphis-based Methodist purchased substantially all the outpatient locations of the largest oncology practice in the area, West Clinic. The lawsuit alleges the “joint partnership” was formed to allow West’s patients to be treated at Methodist locations by West-employed physicians, funneling Medicare reimbursement to Methodist for cancer care.
The complaint claims Methodist and West never created any legal partnership because it would have likely violated the anti-kickback statutes or the Stark Law. The Justice Department seeks to recoup hundreds of millions of dollars for the alleged False Claims Act and anti-kickback statutes violations that occurred from 2012 through 2018.
“Methodist was able to bill Medicare not only for the facility and professional components of outpatient treatment but also for the chemotherapy and other drugs provided, for which Methodist could recoup a staggering discount in costs through the 340B Drug Pricing Program resulting in $50 million in profit to Methodist in one year alone,” the complaint filed Monday in a Tennessee federal court reads.
Methodist said in a statement that it will refute the allegations.
“The government’s complaint recycles a familiar set of allegations that mischaracterize the relationship between MLH and West Clinic. As we have said many times since this lawsuit was made public more than two years ago: The affiliation’s compensation structure was designed by respected outside experts who determined it reflected fair market value for such services,” the company said.
The initial lawsuit was filed in 2017 and unsealed in 2020. A former Methodist board member and the former CEO of Methodist University Hospital claimed that the health system would share 340B drug discount program profits with West Clinic physicians each year as well as guarantee above fair market value rates for services. The scheme allegedly netted more than $1.5 billion in inflated revenues from 2012 to 2018, about half of which was funded by Medicare and Medicaid.
The government intervenes in fewer than 25% of whistleblower lawsuits, according to the DOJ.