Court Finds Bradford Regional Medical Center Violated Federal Law

BRMC accused of taking kickbacks, now faces $20 million in damages plus millions more in penalties

BRADFORD – A federal judge has ruled that Bradford Regional Medical Center, an acute care hospital located in Bradford, Pennsylvania, violated federal law by submitting claims to Medicare based upon referrals from physicians with whom the hospital had a prohibited financial relationship. As a result, the damages owed by the hospital could be well in excess of $20 million plus millions of dollars more in False Claims Act mandatory penalties.

In a 69-page opinion issued November 10, 2010, Judge Maurice B. Cohill, Jr. held that the hospital’s relationship with Drs.Peter Vaccaro and Kamran Saleh and their medical practice, V&S Medical Associates, LLC, violated the federal Stark Act, which generally prohibits hospitals from submitting claims to Medicare based on referrals from physicians with whom the hospital has a financial relationship.  In addition, the court held that a jury will have to determine whether the relationship also violated the federal Anti-Kickback Statute, which prohibits hospitals from paying physicians for Medicare referrals.

The ruling was issued in a whistleblower lawsuit filed under the federal False Claims Act, which allows individuals, known as “relators,” to bring an action on behalf of the government to recover losses caused by fraud.  The relators are four physicians who were members of the medical staff at BRMC.  The physicians are represented by G. Mark Simpson of Atlanta, Georgia, and Andrew M. Stone of Pittsburgh, Pennsylvania.

“This case is especially important because it targets fraudulent and abusive practices that drive up the cost of health care, that we all end up paying for in the form of higher taxes,” said Mr. Stone.

BRMC pursued an ill-conceived and illegal strategy to control cardiac services in the community,” Mr. Stone said.

“The administration compounded their misjudgment with a bet- the-hospital legal defense.  As a result, they are facing many millions of dollars in potential damages and penalties.”  Mr. Stone noted that, under the False Claims Act’s treble damages provisions, the hospital’s liability could exceed $20 million, plus millions more in mandatory penalties.

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