Alabama Ortho Practice Pays $1.2M False Claims Settlement

An Alabama orthopedic surgery and physical therapy practice has agreed to pay $1.2 million to resolve a lawsuit alleging that it violated the False Claims Act and the Physician Self-Referral Law (Stark Law).

A former employee filed a civil lawsuit against Baldwin Bone & Joint, P.C. (BB&J), an orthopedic surgery and physical therapy practice located in Daphne, Alabama, under the qui tam provisions of the False Claims Act. These provisions permit private individuals to sue for false claims on behalf of the government and share in any recovery.

The former employee, John Seddon, alleged that BB&J violated the False Claims Act by billing Medicare and TRICARE for physical therapy services performed by unauthorized providers, including athletic trainers and an exercise physiologist. These types of providers are prohibited from billing these programs.

Seddon also alleged that BB&J violated the Stark Law through its direct compensation arrangements with its shareholder physicians. Seddon specifically alleged that the compensation BB&J paid to its shareholder physicians directly or indirectly related to the volume of each shareholder physician’s referrals for designated health services such as physical therapy, X-rays and MRIs. This type of compensation arrangement is prohibited by the Stark Law.

After the suit was filed, the Office of Inspector General of the U.S. Department of Health and Human Services and the Defense Criminal Investigative Service investigated the matter on behalf of the Medicare and TRICARE programs.

BB&J cooperated with the investigation and agreed to pay $1.2 million to resolve the lawsuit. The settlement resolves all claims. As part of this settlement, Seddon will receive $200,000.

Derrick L. Jackson, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services, said of the settlement, “Providers who falsely bill Medicare for services they didn’t provide, as alleged in this case, not only harm their patients, they also hurt all beneficiaries who depend on Medicare funding to provide access to quality services…We will continue to work with our law enforcement partners to protect taxpayer dollars for these valuable programs.”