U.S. Dermatology Partners (USDP), a prominent entity managing dermatology practices, surgical centers, and pathology labs across the nation, has reached an $8.9 million settlement with the United States. This resolution addresses self-reported allegations of potential violations concerning the Physician Self-Referral Law, commonly known as the Stark Law, and the Anti-Kickback Statute (AKS). The announcement was made by U.S. Attorney for the Northern District of Texas, Leigha Simonton. The core of the government’s contention lies in the potential violations leading to liabilities under the False Claims Act.
The civil settlement, formalized on September 12, 2023, mandates Oliver Street Dermatology Management LLC, operating as U.S. Dermatology Partners, to pay $8,892,079.72 within ten days. This sum includes $5,928,053.15 designated as restitution. The settlement acknowledges USDP’s proactive self-disclosure and cooperation throughout the government’s investigation. Crucially, the self-reported conduct was not previously known to the United States and provided detailed insights into the nature of the potentially problematic transactions, the personnel involved, and the potential financial impact on the government.
U.S. Dermatology Partners’ Expansion and the Allegations
According to the settlement agreement, between January 2013 and July 2018, U.S. Dermatology Partners embarked on a significant expansion, acquiring numerous dermatology practices throughout the United States. This period of growth became the focal point of the subsequent investigation.
In September 2021, USDP voluntarily disclosed to the Department of Justice credible evidence suggesting misconduct by former senior managers. The evidence indicated that these managers had offered or agreed to inflate the purchase price of 11 acquired dermatology practices. This increase was allegedly contingent upon the acquired practices agreeing to refer services to USDP-affiliated entities post-acquisition. Subsequently, claims for some of these referred services were submitted to Medicare for payment.
Legal Framework: Stark Law and Anti-Kickback Statute
The United States asserted that this conduct infringed upon both the Anti-Kickback Statute and the Stark Law, resulting in the submission of false claims to Medicare. Understanding these laws is crucial to grasping the implications of this settlement for US Dermatology Partners and the healthcare industry.
The AKS is designed to prevent financial inducements from influencing healthcare referrals. It prohibits offering or paying any form of remuneration to induce referrals for items or services covered by Medicare and other federally funded healthcare programs. This is to ensure that clinical decisions are based on patient needs, not financial incentives.
Similarly, the Stark Law prohibits healthcare entities from billing Medicare for certain designated health services referred by physicians with whom the entity has a financial relationship, unless the relationship falls under specific statutory or regulatory exceptions. The aim of the Stark Law is to eliminate conflicts of interest in healthcare, ensuring that referrals are made in the best interest of patients and not for personal financial gain.
Both the AKS and the Stark Law are integral in safeguarding the integrity of medical decision-making, ensuring that financial considerations do not compromise patient care.
Government Applauds Self-Disclosure and Cooperation
U.S. Attorney Leigha Simonton emphasized the importance of unbiased medical decisions, stating, “Decisions about where medical specimens are analyzed should be made with the best interests of patients, not providers, in mind.” She commended US Dermatology Partners for their self-reporting and cooperation, which facilitated a swift resolution.
This resolution is a testament to the collaborative efforts of the U.S. Attorney’s Office for the Northern District of Texas and the U.S. Department of Health & Human Services’ Office of Inspector General, with Civil Chief Kenneth Coffin playing a key role.
It is important to note that the claims resolved by this settlement are allegations, and there has been no formal determination of liability. However, the significant settlement amount and the focus on self-disclosure highlight the government’s commitment to enforcing healthcare regulations and encouraging proactive compliance within the healthcare industry, particularly concerning entities like US Dermatology Partners.
