BOSTON (WWLP) – Steward Health Care System and several related corporate entities have agreed to pay approximately $4.735 million to resolve allegations that its relationships with several physicians and physician practice groups violated federal law, including the False Claims Act.

Despite public denials, in the signed settlement agreement, Steward “admits, acknowledges, and accepts responsibility” for the facts underlying the government’s allegations.

Steward is one of the largest, private for-profit healthcare networks in the nation and the owner of multiple hospitals in Massachusetts. Steward owns and operates Steward Good Samaritan Medical Center, Inc. (GSMC), a for-profit hospital in Brockton.

Over the course of the government’s investigation, Steward disclosed facts about two other sets of physician relationships that violated federal law. First, in October 2010, Steward entered into a compensation arrangement with a physician pursuant to which the physician agreed to serve as GSMC’s Medical Director of Post-Acute Care Services.

Steward admitted that it has been unable to confirm that the physician performed the services but that it still paid the physician from November 2010 through June 2016 and that the physician referred patients to GSMC during that period.

Second, Steward admits that it failed to charge the proper rent on some of its leases with physicians, physician organizations, and non-physician organizations, resulting in some of those entities paying rent below fair market value.

Steward admitted that between January 2010 and October 2015, it leased real property to these physicians and physician organizations and that those entities were referral sources for Steward’s Massachusetts hospitals. 

“This case is about fraud, waste, and abuse by Steward at the expense of the American taxpayers,” said United States Attorney Rachael S. Rollins. “When hospitals like Steward violate the law, we will work tirelessly to recover from them taxpayer money in order to ensure that Medicare and Medicaid funds are going to treat patients instead of supporting fraud.”

“Financial and referral arrangements between hospitals and physician practices that violate federal health care laws undermine the integrity of crucial medical decision-making,” said Phillip M. Coyne, Special Agent in Charge of HHS-OIG. “This settlement is an example of the government’s combined efforts to protect Federal health care programs and their beneficiaries from those who are alleged to have violated these laws.”

“This settlement should serve as a warning to hospitals that they should not pay referring doctors for services that they did not provide,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division. “Here a hospital paid referring physicians under the guise of a bogus cancer center. The FBI is proud to work alongside our partners to make sure hospitals follow the law and to root out fraud anywhere in the system.”

The False Claims Act settlement resolves Steward’s self-disclosures and allegations originally brought by a lawsuit filed by whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties, known as relators, to bring suit on behalf of the government and to share in any recovery.

In connection with today’s announced settlement, the relators will receive 17% of the recovery.