Centra, Blue Ridge ENT agree to pay nearly $10 million to settle alleged improper financial relationships

Centra in Lynchburg on coronavirus

LYNCHBURG, Va. – Centra Health and Blue Ridge Ear, Nose, Throat and Plastic Surgery have agreed to pay nearly $10 million to settle claims that they had improper financial relationships.

According to court documents, Blue Ridge ENT allegedly had a financial relationship with Centra that guaranteed income to one of its physicians. Centra also allegedly agreed to pay back Blue Ridge ENT for actual additional incremental costs attributed to that physician.

The Department of Justice claims that Blue Ridge ENT knowingly claimed and received reimbursement beyond what’s allowed by the Stark Law and Anti-Kickback Law.

These allegations were brought by a whistleblower and former physician at Blue Ridge ENT in a lawsuit under a provision of the False Claims Act, which allows a person to sue on behalf of the government and share in any recovery.

“This settlement sends a strong message that improper financial relationships between hospitals and their referral sources will not be tolerated in Virginia,” said Attorney General Mark Herring.

Court documents allege that Centra and its affiliates had relationships with several referring physicians and groups, including Blue Ridge ENT, in violation of several laws that restrict financial relationships hospitals can have with referring physicians. Those laws include the Stark Law, the Anti-Kickback Law and other federal regulations.

According to the Department of Justice, the two companies were also accused of violating the False Claims Act and the Virginia Fraud Against Taxpayers Act.

“Improper financial relationships between hospitals and their referral sources can compromise a physician’s medical judgment, increase health care costs, threaten the integrity of the healthcare system, and endanger the public’s trust," said first assistant United States attorney Daniel Bubar.

Centra proactively came forward, self-disclosed its violations of the False Claims Act, and worked with the government to resolve these issues, according to court documents.

“Centra and its affiliated hospitals stepped up and self-disclosed their improper relationships with physician groups, including blatant violations of the Stark self-dealing law, compensation for referrals, and problematic physician recruitment agreements,” said Maureen Dixon, special agent in charge of the Office of Inspector General for the U.S. Department of Health and Human Services. “We will continue working closely with our State and Federal partners to protect the integrity of government health programs.”

Blue Ridge ENT and Centra will pay $9,345,845 in the settlement, and the whistleblower will receive a part of that settlement.

Centra officials sent 10 News a statement responding to the settlement:

"Centra Health, Inc. has agreed to a settlement with the U.S. government, stemming from regulatory deficiencies self-disclosed by Centra in 2012 and the second to resolve a qui tam lawsuit filed in 2016. In both situations, the alleged deficiencies had no impact on patient care and were related to rules governing contracting and financial relationships with physicians.

In 2012, Centra identified contract compliance issues through an internal audit and voluntarily self-disclosed to the United States Department of Justice and United States Attorney’s Office for the Western District of Virginia.

Beginning in 2012, Centra implemented a state-of-the art contract tracking system and conducted extensive training on physician contracting requirements to prevent a recurrence of the issues addressed in the self-disclosure. Throughout this process, Centra has cooperated fully with the government and has agreed to pay $5.9M under the self-disclosure settlement.

Separately, in 2016, a former physician employed by Blue Ridge Ear, Nose and Throat (BRENT), an independent physician practice in Lynchburg, filed a qui tam whistleblower action against both Centra and BRENT."

The suit alleged that Centra entered into a recruitment agreement in 2008 that violated Stark and the Anti-Kickback Statute and resulted in the violation of the False Claims Act and the Virginia Taxpayers Against Fraud Act. Centra has agreed to pay $1.8M to settle the qui tam action.

“We have worked proactively, cooperatively and collaboratively with the government to achieve resolution,” said Andy Mueller, M.D., President and CEO of Centra. “Our organization is committed to complying with the regulations governing our industry and to working cooperatively with government officials when issues are identified. Centra is committed to providing excellent care for our patients while adhering to our core values of integrity, respect and teamwork.”

About the Authors:

Samantha Smith joined WSLS 10’s award-winning digital team as a content producer in July 2018.