MEMPHIS, Tenn. — Memphis' Methodist Le Bonheur Healthcare has settled a federal lawsuit over its partnership with the West Clinic.
The lawsuit, which began in 2017, accused the healthcare system of paying West Clinic for patient referrals.
Methodist said in a news release that the settlement amount is less than 3% of the original amount sought, and is “roughly equivalent” to what Methodist would have spent to continue litigation. The DOJ said in a news release Methodist paid $7,250,000 to resolve allegations it violated the False Claims Act.
“Methodist continues to dispute the allegations, but recognized this litigation is a drain on resources that are best used to provide the highest quality and safest care to our patients, as the region’s only Leapfrog Grade-A health system,” said its own statement.
The U.S. Department of Justice's Attorney's Office claimed payments Methodist made to West Clinic for unlawful patient referrals were disguised as a management partnership from December 2011 to February 2019. The DOJ claimed Methodist continued the illegal partnership even after a whistleblowers’ lawsuit was filed on May 30, 2017 by Jeffrey H. Liebman, who is the former President of Methodist University Hospital.
“Federal law prohibits money from influencing where a doctor refers a patient for treatment to keep doctors focused solely on what is best for the patient,” said United States Attorney Henry C. Leventis. “We contend that Methodist’s affiliation with the West Clinic ran afoul of that law. When hospitals pay kickbacks to physician practices, regardless of what form those kickbacks take, they can expect to be the focus of our enforcement efforts.”
Methodist said the terms of the settlement will not subject the hospital system to a Corporate Integrity Agreement, which would have meant monitoring of its compliance practices.
“The lack of such a requirement, along with the government’s willingness to settle for a fraction of the original damages request, further underscores the organization’s contention that the suit was without merit,” the statement continued. “As the Government stated today, the claims settled by the settlement are allegations only, and there has been no determination of liability.”
In April 2022, West Cancer Center CEO, Mitch Graves, told ABC24 in a statement that the center reached a settlement with DOJ for the 2017 lawsuit: “West Cancer Center settled with the plaintiffs on the 2017 Qui Tam lawsuit last year and is no longer a defendant. We believe the allegations are totally unfounded but settled to avoid a potentially prolonged lawsuit to focus on caring for our cancer patients. At West Cancer Center and Research Institute, our patients are our top priority, and this lawsuit was a distraction to our mission of providing outstanding cancer care.”