WASHINGTON A subsidiary of Universal Health Services Inc has agreed to pay $27.5 million to settle allegations that it illegally paid compensation to doctors to refer patients to its hospitals, the U.S. Justice Department said on Friday.
The unit, McAllen Hospitals LP, which does business as South Texas Health System, allegedly disguised the payments as sham contracts, including medical directorships and lease agreements, between 1999 and 2006, the government said.
The company also entered into a five-year agreement that requires it to set up a system for tracking and evaluating financial arrangements between its healthcare facilities and referral sources.
"Improper financial relationships between healthcare providers and their referral sources can corrupt a physician's judgment about the patient's true healthcare needs," Tony West, assistant attorney general for the department's civil division, said in a statement.
A spokeswoman for Universal Health Services was not immediately available for comment.
(Reporting by Jeremy Pelofsky; Editing by Leslie Gevirtz, Gary Hill)