North Charlotte Today

The United States has filed a complaint against Murphy Medical Center, Inc., doing business as Erlanger Western Carolina Hospital, and Chattanooga-Hamilton County Hospital Authority, operating as Erlanger Health System and Erlanger Medical Center (collectively known as Erlanger), in the U.S. District Court for the Western District of North Carolina. The government alleges that Erlanger violated the Stark Law and submitted false claims to the Medicare program.

The Stark Law prohibits hospitals from billing Medicare for services referred by physicians with whom they have improper financial relationships unless these relationships meet statutory or regulatory exceptions. The complaint claims that Erlanger's employment relationships with certain physicians did not meet any Stark Law exceptions because the compensation paid to these physicians was significantly above fair market value. As a result, Erlanger allegedly received referrals from these physicians in violation of the Stark Law and knowingly submitted ineligible claims to Medicare.

“Improper financial relationships between hospitals and physicians threaten the integrity of clinical decision-making and can influence the type and amount of health care that is provided to patients,” stated Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to ensuring that physicians’ treatment decisions are based on the needs of their patients and not their own financial interests.”

U.S. Attorney Dena J. King remarked, “The government’s complaint alleges that Erlanger compromised Stark Law compliance to boost its financial standing, knowingly overpaying physicians whose practices generated profits for the hospital.” She added, “We are dedicated to enforcing the Stark Law and protecting patients and the Medicare program from financial relationships that undermine public trust and incentivize overbilling and waste of taxpayer dollars.”

Special Agent in Charge Tamala E. Miles of the Department of Health and Human Services Office of Inspector General (HHS-OIG) commented, “This complaint serves as a warning to health care entities that attempt to increase profits through improper financial arrangements with referring physicians.” She affirmed HHS-OIG's commitment to investigating such deals to prevent financial arrangements compromising impartial medical judgment, increasing health care costs, and eroding public trust.

The United States' complaint originated from a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act. These provisions allow private parties to file suit on behalf of the United States for false claims and receive a share of any recovery. The Act permits U.S. intervention in such lawsuits, which has occurred partially in this case. Violators are subject to treble damages and applicable penalties.

This case underscores the government's focus on combating health care fraud using tools like the False Claims Act. Tips about potential fraud can be reported to HHS at 800-HHS-TIPS (800-447-8477).

The Justice Department’s Civil Division and the U.S. Attorney’s Office for the Western District of North Carolina managed this case with assistance from HHS-OIG.

The case is titled United States of America, State of North Carolina, State of Tennessee ex rel. Alana Sullivan and J. Britton Tabor v. Murphy Medical Center, Inc., et al., No. 1:21-CV-219-MR-WCM (W.D.N.C.).

The allegations made in this complaint remain unproven; there has been no determination of liability.

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