Beaumont pays $84.5 million to settle whistleblower lawsuits

Karen Bouffard | The Detroit News

Beaumont Health announced Thursday it has paid $84.5 million to settle allegations of illegal payments made to doctors in exchange for patient referrals between 2004 and 2012.

The health system made no admission of wrongdoing, but agreed to pay $82.74 million to the United States and $1.76 million to the state of Michigan to settle whistleblower lawsuits brought by four former administrative and physician employees.

Beaumont also agreed to enter into a five-year "corporate integrity agreement" as part of the settlement with the U.S. Department of Justice, the state and the four whistleblowers.

The whistleblowers claimed that Beaumont overpaid eight physicians and provided them with offices and employees at below-market rates, in exchange for patient referrals, and then billed the federal Medicaid and Medicare programs.

“We are very pleased with the outcome of this case," U.S. Attorney Matthew Schneider said in a statement. "This result should impress on the medical community the fact that we will aggressively take action to recover monies wrongfully billed to Medicare, through the remedies provided in the federal False Claims Act.”

Beaumont had been under investigation by the Justice Department since 2011, according to the health system.

“The resolution of these matters, some of which go back to contracts originating 14 years ago, reflects Beaumont Health’s commitment to the future of health care in Southeastern Michigan," President and CEO John Fox said in a press release Thursday.

"Since the formation of Beaumont Health in 2014, the new management team has implemented additional compliance and legal review processes to ensure our effective compliance with the complex regulations applicable to health systems and to provide additional assurance that these types of issues do not arise again."

Under the agreement, Beaumont will work with the U.S. Department of Health and Human services "to ensure the highest levels of compliance and transparency at all levels of the organization," Fox added.

"Most importantly, we will continue forward with our focus on our critical mission of delivering compassionate, extraordinary care to our patients, families and the communities we serve.”

Beaumont said it made the settlement payment Thursday, using funds set aside in anticipation of settling the case.

According to the Justice Department, Beaumont also allegedly misrepresented that a CT radiology center qualified as an outpatient department in claims to federal health care programs.

Classifying the center as an outpatient department allowed Beaumont to wrongly bill federal health programs at a higher rate, according to Marc Vezina, a Birmingham attorney who represented one of the whistleblowers.

It has not yet been determined how much will go to the whistleblowers, according to Vezina, but it will be between 15 percent and 25 percent.

Vezina said the Department of Justice and U.S. Department of Health and Human Services worked with attorneys for the whistleblowers to resolve the case.

"It was really a public-private partnership," he said, adding he's pleased with the settlement. "That's a code of conduct they're going to have to live with for five years."

kbouffard@detroitnews.com