South Dakota Surgical Hospital Agrees to Pay More Than $12.7M to Resolve Alleged False Claims Act Violations

Siouxland Surgery Center LLP, doing business as Dunes Surgical Hospital (Dunes), United Surgical Partners International Inc. (USPI) and USP Siouxland Inc. have agreed to pay approximately $12.76 million to resolve alleged False Claims Act violations relating to improper financial relationships between Dunes and two physician groups. Dunes is a surgical hospital located in Dakota Dunes, South Dakota. Since July 1, 2014, USPI has maintained partial ownership of Dunes through USP Siouxland, a wholly owned subsidiary of USPI. Dunes and USPI disclosed the arrangements at issue to the government following an internal compliance review and independent investigation.

The settlement resolves allegations that, from at least 2014 through 2019, Dunes made significant financial contributions to a non-profit affiliate of a physician group whose physicians referred patients to Dunes. Those payments allegedly funded the salaries of athletic trainers who generated referrals to both the physician group and to Dunes. The settlement also resolves allegations, that during the same time period, Dunes provided another physician group with free or below-fair-market-value clinic space, staff, and supplies. The United States alleged that these arrangements violated both the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law, commonly known as the Stark Law. The AKS prohibits the provision of remuneration to induce the referral of services or items that are paid for by a federal health care program. The Stark Law prohibits hospitals from billing for certain services referred by physicians with whom the hospital has a financial relationship, unless that relationship satisfies one of the law's statutory or regulatory exceptions. A claim submitted in violation of the AKS or the Stark Law can also violate the False Claims Act.

"The AKS and Stark Law are designed to ensure that decisions about patient care are based on physicians' independent medical judgment and not their personal financial interest," said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division. "As this settlement reflects, we will hold accountable those who violate these important safeguards, but we will also give to those who disclose their wrongdoing, take appropriate remedial actions and meaningfully cooperate with the government's investigation."

In connection with the settlement, the United States acknowledged that Dunes and USPI took a number of significant steps entitling them to credit for cooperating with the government. Following an internal compliance review and independent investigation, Dunes and USPI promptly took remedial actions and disclosed the relevant arrangements to the government. Dunes and USPI also provided the government with a detailed and thorough written disclosure and cooperated with the government throughout its investigation.

"Illegal kickbacks and self-referrals make healthcare more expensive and create the potential for medical decisions that are not based on what is best for patients," said U.S. Attorney Timothy T. Duax for the Northern District of Iowa. "Our office welcomes the cooperation of those who self-disclose and will continue to work with our law enforcement partners to ensure that taxpayers do not bear the costs of illegal and unethical practices."

"The U.S. Attorney's Office is dedicated to fostering a healthcare environment that prioritizes patient well-being above all," said U.S. Attorney Alison Ramsdell for the District of South Dakota. "We stand firmly against any actions that could undermine the trust and transparency that form the cornerstone of patient care and remain committed to working closely with healthcare professionals and regulatory bodies to promote ethical practices to ensure patients receive the highest standard of care."

"Individuals and entities that participate in the federal health care system are required to obey laws designed to preserve the integrity of program funds and ensure the provision of appropriate, quality services to patients," said Special Agent in Charge Linda T. Hanley of the Department of Health and Human Services Office of Inspector General (HHS-OIG). "Together with our federal and state law enforcement partners, we remain committed to investigating allegations of improper arrangements that can put patient safety at risk."

The settlement resolves allegations of false billings to the Medicare, TRICARE and Medicaid programs. The Medicaid program is jointly funded by the federal and state governments. In addition to the approximately $12.76 million to be paid to the federal government for alleged violations of the False Claims Act, South Dakota, Iowa and Nebraska will collectively receive approximately $1.37 million for their share of the Medicaid portion of the settlement.

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division's Commercial Litigation Branch, Fraud Section; U.S. Attorney's Office for the Northern District of Iowa; U.S. Attorney's Office for the District of South Dakota; and HHS-OIG.

The investigation and resolution of this matter illustrates the government's emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800-HHS-TIPS (800-447-8477).

Trial Attorney Nathan Green, Assistant U.S. Attorney Brandon Gray for the Northern District of Iowa and Assistant U.S. Attorney Alexis Warner for the District of South Dakota handled the matter.

The claims resolved by the United States in the settlement are allegations only. There has been no determination of liability.

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