Ohio-Based Healthcare System Agrees to Pay $21 Million to Settle Accusations of False Claims Act Violations

Healthcare violations continue to grow in the country as several companies get caught trying to game the system and illegally reap gains.

In yet another cycle in this recurring theme, Akron General Health System (AGHS), a healthcare system based out of Ohio, has settled with the United States government over accusations of duping the federal Medicare system.

A Double Violation in Ohio

According to a press release published by the Department of Justice (DOJ) earlier this month, Akron General Health System, which is owned by the Cleveland Clinic, had made successive inflated payments to area physician groups between August 2010 and March 2016 in exchange for patient referrals.

At the same time, Akron General Health System was found to have submitted claims for several illegally provided services to Medicaid, Medicare, and several other federal government-funded healthcare programs.

The atrocities committed by Akron General Health System were found to have violated several statutes. These included the federal Anti-Kickback Statute, which prohibits healthcare practitioners from soliciting, paying, or receiving payments to get referrals for services that federal programs already cover.

Also, the activities ran foul of the Physician Self-Referral Law, which prohibits a hospital from billing Medicare for specific services that were referred to by physicians with whom the hospital has a wrong financial arrangement. Also known as the Stark Law, the status covers payment of compensations that exceed the fair market value of physicians' normal services.

Firing the Whistleblower

Akron General Health System was eventually done in after Beverly Brouse, its former director of internal audit, brought a case against the firm in late 2015. Since then, the Justice Department had been building its case and working to catch the company in its crimes.

Beverly Brouse was also the one who highlighted that the healthcare system had violated these statutes. However, the Justice Department had some assistance from the Cleveland Clinic as well.

According to the Justice Department’s press release, the Cleveland Clinic had purchased Akron General Health System in 2015. However, the clinic also pointed to the Justice Department that they had concerns with the compensation arrangements that Akron General had with several of its physicians. The agreements were apparently put in place by the health system’s former leadership.

Brian Boynton, the Acting Assistant Attorney-General for the Justice Department’s Civil Division, said in a statement:

“Improper payments to physicians for referrals threaten the integrity of our health care system and deprive patients of the independent medical decision-making that they deserve. The DOJ is committed to upholding these important interests and to pursuing providers who engage in improper financial arrangements.”

Beverly Brouse explained that she took the issue to the Compliance and Internal Audit Committee at Akron General Health System in 2015. Soon after the acquisition by the Cleveland Clinic, the system terminated her. In her initial complaint, Brouse alleged that the firing was correlated to her efforts to report and fix the health system’s violations.

The Fallout From the Case

In May of this year, the health system and the Justice Department agreed to settle the case for $21.3 million. Under the provisions of the False Claims Act, Beverly Brouse is eligible for a percentage of the settlement amount.

The False Claims Act is one of the strongest Medicare protection and whistleblower entitlement laws in the land. Under the Act, individuals and organizations are strictly prohibited from engaging in activity that could jeopardize the integrity of initiatives funded by the federal government. In cases where these violations are caught and fined, whistleblowers who bring the suit are given a percentage of the fines.

Given her role in getting Akron General Health System to make these payments, Brouse is eligible for payment. The whistleblower said in a statement:

“I raised in good faith issues regarding arrangements that AGHS had with certain physician groups. Those arrangements are discussed in the settlement agreement reached with the DOJ. I also had concerns about my termination from AGHS. I am pleased that the DOJ, Akron General and I were able to resolve these matters.”

As for Akron General Health System, it seems ready to continue operating following the fine. It definitely helps that the Cleveland Clinic was willing to collaborate with the Justice Department to get to the bottom of the case.

In a statement, the clinic explained that they remain committed to compliance with healthcare regulations across the company.

“In early 2016, shortly after Cleveland Clinic acquired Akron General, we identified a potential compliance concern related to Akron General’s contracts with a few of its independent physician groups ...We promptly reported the matter to the Department of Justice and fully cooperated with its review. Akron General and the Department of Justice have now reached a settlement,” the company explained in a statement.


Steve Halperin

New York trial attorney Steve T. Halperin is a well-known litigator with extensive knowledge of whistleblower laws and the New York False Claims Act. He has 28 years of experience as one of New York’s top tier attorneys. From the Manhattan offices of HalperinBikel, Steve’s whistleblower cases can run the gamut from lawsuits against healthcare. Whistleblowers: A New Yorker’s Step By Step Guide systems and providers cheating on New York Medicaid to private companies providing worthless services, or false billings by government contractors. With hundreds of winning verdicts and favorable settlements in healthcare and corporate cases, attorney Halperin’s meticulous preparation, courtroom acuity, and client-centered professionalism create remarkable outcomes.

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