California medical center to pay $42 million penalty after kickback allegations

By Mark Iandolo | Jul 5, 2017

LOS ANGELES (Legal Newsline) — The U.S. Department of Justice announced June 28 that PAMC Ltd. and Pacific Alliance Medical Center Inc. will pay $42 million to settle allegations of violating the False Claims Act via improper payments to physicians.

“Federal law prohibits improper financial relationships between hospitals that receive federal health care funds and medical professionals – this is to protect the doctor-patient relationship and to ensure the quality of care provided,” said acting U.S. attorney Sandra R. Brown for the Central District of California. “Patients deserve to know their doctors are making health care decisions based solely on medical need and not for any potential financial benefit.”

According to allegations brought via a whistleblower lawsuit, the defendants had improper financial relationships with a number of physicians. The defendants created arrangements in which they would pay above-market rates to rent office space in physicians’ offices or provide undue benefit to physicians’ practices.

“This is another example of how the False Claims Act whistleblower provisions can help protect the public fisc,” said acting assistant attorney General Chad A. Readler of the Justice Department’s Civil Division. “This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers.”

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