A False Claims Act lawsuit against a South Carolina medical center has ended in a multi-million dollar settlement.

In a settlement with the U.S. Department of Justice, Lexington Medical Center of West Colombia, S.C. has agreed to pay $17 million to resolve allegations that it fostered improper financial arrangements with 28 physicians, according to a DOJ press release.

The arrangements at issue allegedly violated the False Claims Act, which forbids making false claims for compensation to the federal government, and the Physician Self-Referral Law, or Stark Law, which is “intended to ensure that physician referrals are made based on the medical needs of the patients and are not tainted by certain financial arrangements,” according to the DOJ.

Stark Law Claims Included in False Claims Act Lawsuit

The government alleged that Lexington Medical Center had violated the Stark Law in agreements it made with physicians either for employment or to purchase those physicians’ practices. These agreements involved 28 physicians in five different practices.

The agreements purportedly violated the Stark Law because they “took into account the volume or value of physician referrals, were not commercially reasonable or provided compensation in excess of fair market value” the DOJ said.

In addition to the monetary penalty, the settlement also requires Lexington Medical Center to submit to the terms of a five-year long Corporate Integrity Agreement that will require the medical center to implement new measures designed to prevent or expose any future conduct similar to that alleged in the False Claims Act lawsuit.

The Corporate Integrity Agreement calls for training employees in compliance with the Stark Law and the Anti-Kickback Statute, another law intended to prevent financial arrangements that could affect a physician’s medical judgment.

It also calls for the creation of a compliance committee, oversight of compliance by the board of directors, and appointment of a compliance officer who will answer directly to the CEO.

A spokesperson for Lexington Medical Center said the hospital believes its financial arrangements were structured in accordance with applicable laws.

The hospital expressed the intent to continue review of its internal and external processes to ensure compliance, the spokesperson said.

This False Claims Act lawsuit was filed by whistleblower David H., a former LMC physician. David will receive $4.6 million as his share of the recovery.

Under the Stark Law, hospitals are generally forbidden from billing Medicare for referrals from physicians who have a financial relationship with that hospital, unless the referral falls within certain exceptions.

Those exceptions require, for example, that the arrangements are commercially reasonable and that they do not exceed fair market value or take into account the volume or value of patient referrals.

The qui tam provisions of the False Claims Act allow persons with evidence of fraudulent claims made against the government to take action against that alleged fraud by filing their own False Claims Act lawsuit.

According to the press release, the DOJ has recovered over $30 billion through False Claims Act cases. More than $18.3 billion of that amount was recovered from cases of alleged fraud in government health care programs, the DOJ says.

The False Claims Act Lawsuit is Case No. 3:14-cv-03653, in the U.S. District Court for the District of South Carolina.