A healthcare system in Florida will pay $69.5 million to settle a federal whistleblower suit alleging that it violated the Stark Law by rewarding physicians for referrals and by penalizing them for accepting charity cases.

Broward Health, which is financed by taxpayers, issued a statement saying it "does not admit any improper conduct as part of the settlement," and adding that "there were no patient care issues alleged." Broward operates 5 medical centers and hospitals, 4 outpatient facilities, and more than 40 urgent care centers and clinics.

Michael T. Reilly, MD, an orthopedic surgeon who initiated the suit and who will be paid more than $12 million as his share of the settlement under provisions of the False Claims Act, says he considered accepting a job with Broward, but rejected the offer when he saw the contract proposal. He says Broward concealed its scheme by maintaining "contribution margin reports" for physicians who were paid salaries of $1 million or more for referrals. Contribution margins calculate a doctor's contribution to the bottom line, subtracting the cost of his charity cases from the value of his referrals.

David Di Pietro, chair of the North Broward Hospital District Board of Commissioners, acknowledges in a statement that the "allegations were focused solely on highly complicated contracts with physicians." But according to the lawsuit, there was a "deliberate strategic plan to boost hospital admissions and outpatient visits for all paying patients, including patients with Medicare and Medicaid coverage (and) Broward Health's financial strategists have personally profited from bonus payments based in part on hospital revenues."

Jim Burger