Physicians groups resolve U.S. patient referral probe for over $33 million

(Reuters) - Two physicians groups including one operated by Envision Healthcare Corp will pay over $33 million to resolve claims they received illegal inducements to refer patients to a hospital operator’s facilities, the U.S. Justice Department said on Tuesday.

EmCare Inc, a Dallas-based subsidiary of Envision, will pay $29.6 million while Physicians’ Alliance Ltd, whose doctors recently joined Penn State Health, will pay at least $4 million under the terms of separate settlement agreements.

Both accords resolve claims the physicians groups received illegal payments and consideration in exchange for referring patients to hospitals owned by Health Management Associates Inc (HMA) before Community Health Systems Inc acquired it in 2014.

The Justice Department said that from 2008 to 2012, HMA made bonus payments to EmCare doctors and tied EmCare’s contracts for staffing its hospitals to increasing admissions to HMA facilities of patients covered by Medicare.

The Justice Department said Lancaster, Pennsylvania-based Physicians’ Alliance and three of its executives from 2009 to 2012 similarly accepted payments in return for referring patients to two HMA hospitals.

Neither physicians group admitted wrongdoing in connection with the settlements. Envision said that with interest, its total payment to resolve the investigation would total $31 million.

Physician’s Alliance meanwhile agreed to pay not just the $4 million but a percentage of the proceeds from the sale of its interest in a joint venture it had with HMA. The group said in a statement its “first priority has always been and will continue to be to provide the best care for our patients.”

Envision’s share price closed on Tuesday at $33.14, down 2.13 percent.

The settlements resolve allegations contained in lawsuits filed under the False Claims Act, which allows whistleblowers to sue companies on the government’s behalf to recover taxpayer money paid out based on fraudulent claims.

If successful, whistleblowers receive a percentage of the recovery. The government can intervene in the lawsuits, which is typically a major boost to such cases.

The Justice Department said two doctors whose medical practice previously supplied doctors to staff HMA hospital emergency departments, Thomas Mason and Stephen Folstad, will receive $6.2 million under the EmCare settlement.

Two former HMA executives, George Miller and Michael Metts, will also receive a share of the Physicians’ Alliance settlement, though the Justice Department said the amount of their cut has not yet been determined.

Reporting by Nate Raymond in Boston; Editing by Chris Reese