The U.S. Department of Justice (DOJ) announced that Flower Mound Hospital Partners LLC, a partially physician-owned hospital in Flower Mound, Texas, agreed to pay $18.2 million to settle its alleged violations of the False Claims Act (FCA). The DOJ alleged that the hospital knowingly violated the FCA by submitting claims to Medicaid, Medicare, and TRICARE that it knew were illegal under the federal Physician Self-Referral Law (also known as the Stark Law) and Anti-Kickback Statute.

The DOJ’s allegations stemmed from Flower Mound Hospital’s repurchases of its shares from older physician-owners and subsequent resales of those shares to its younger physicians. The DOJ alleged that, as part of those transactions, the hospital illegally took into consideration the volume and value of physicians’ referrals of patients to the hospital.

In addition to the settlement payment, Flower Mound Hospital agreed to a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services’ Office of Inspector General under which it will be required to maintain a robust compliance program and retain an Independent Review Organization for further oversight.

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