Tri-City Self Reported 2009 Contracting Violation in 2011

Oceanside CA—Tri-City Healthcare District, the U.S. Department of Justice and Office of the Inspector General have announced a settlement agreement over medical staff contracting violations that occurred in 2009 and that Tri-City Medical Center voluntarily reported in 2011.
The settlement agreement was reached January 15 and resolves technical violations in physician contracts under the Stark Law as well as a civil claim. As part of the settlement, Tri-City Healthcare District has been assessed $3,278,464.
The Stark law is a limitation on certain physician referrals. It prohibits physician referrals of designated health services (“DHS”) for Medicare and Medicaid patients if the physician (or an immediate family member) has a financial relationship with that entity. A financial relationship includes ownership, investment interest, and compensation arrangements.
“The settlement of this matter reflects not only our commitment to protect the integrity of the healthcare system through enforcement of the Stark Law, but also our willingness to work with providers who disclose their own misconduct,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.
The settlement announced today resolves allegations that Tri-City Medical Center maintained 97 financial arrangements with physicians and physician groups that did not comply with the Stark Law. The hospital identified five arrangements with its former chief of staff from 2008 until 2011 that, in the aggregate, appeared not to be commercially reasonable or for fair market value. The hospital also identified 92 financial arrangements with community-based physicians and practice groups that did not satisfy an exception to the Stark Law from 2009 until 2010 because, among other things, the written agreements were expired, missing signatures or could not be located.
“Patient referrals should be based on a physician’s medical judgment and a patient’s medical needs, not on a physician’s financial interests or a hospital’s business goals,” said U. S. Attorney Laura E. Duffy of the Southern District of California. “This settlement reinforces that hospitals will face consequences when they enter into financial arrangements with physicians that do not comply with the law. We will continue to hold health care providers accountable when they shirk their legal responsibilities to the detriment of tax payer-funded health care programs.”
“Together with our law enforcement partners, our agency’s investigators and attorneys will continue to work with health care providers who use the self-disclosure protocol to resolve their billing misconduct,” said Special Agent in Charge Chris Schrank of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Los Angeles region.”
Tri-City Medical Center self-disclosed the violations in a letter to the Office of the Inspector General on July 20, 2011 and in a report submitted April 30, 2012.
The hospital executives that oversaw the contracting are no longer affiliated with Tri-City Medical Center and all of the medical center’s current physician contracts are in compliance with the Stark Law.
“It is unfortunate to have inherited this long-standing legal issue, but we are pleased to have brought it to a successful conclusion,” explained CEO Tim Moran. He further stated, “This is a clear indication that we must all strictly adhere to the guidelines set forth by all healthcare governing agencies.”
The Settlement Agreement brings to resolution multiple technical violations and a civil claim involving physician contracts wherein certain arrangements exceeded fair market value and were considered not commercially reasonable.

About Tri-City Medical Center

Tri-City Medical Center has served its community for over 50 years and is a 397 bed full service, acute-care hospital in Oceanside, Calif. with a primary care clinic and over 700 physicians practicing in 60 specialties. Its Gold Seal of Approval® from the Joint Commission recognizes its commitment to safe and effective patient care for the residents of the community it serves. It operates the only Level III Neonatal Intensive Care Unit (NICU) in North County as well as an Orthopaedic & Spine Institute, a Cardiovascular Health Institute and a Neuroscience Institute along with the Tri-City Wellness Center in Carlsbad, Calif., recognized as one of the best wellness centers in San Diego County. It also specializes in women’s health, robotic surgery, cancer and emergency care. Tri-City Medical Center has received its fifth consecutive “A” rating from the national hospital safety scoring organization, The Leapfrog Group.
For more information about Tri-City Medical Center and Tri-City Healthcare District, please visit www.tricitymed.org.