BRADENTON, Fla. - The North Broward Hospital District in Florida will pay the federal government $69.5 million to settle allegations that it violated the False Claims Act, according to the Justice Department.
The settlement, announced Sept. 15, resolves allegations that the district provided compensation to nine employed physicians that exceeded the fair market value of their services in violation of the Stark Statute and the False Claims Act, Justice officials said.
The allegations arose from a whistleblower lawsuit filed in 2010 by Fort Lauderdale orthopedic surgeon Michael Reilly.
Reilly will receive $12.04 million of the settlement.
"The Department of Justice has long-standing concerns about improper financial relationships between health care providers and their referral sources, because those relationships can alter a physician's judgment about the patient's true health care needs and drive up health care costs for everybody," said a statement by deputy assistance attorney general Benjamin C. Mizer, head of the Civil Division.
The hospital district did not immediately respond to a request for comment.
A spokeswoman told the Sun Sentinel newspaper that the district did not admit or deny any improper conduct as part of the settlement.
The Broward County-based special district, which calls itself Broward Health, receives taxpayer funds to operate four hospitals and other health care facilities.
It is overseen by seven commissioners appointed by the governor.
The district had $245.3 million of variable-rate demand bonds and related swaps outstanding at the end of fiscal 2014.
Standard & Poor's, while affirming the districts AAA/A-1-plus ratings in December, said it believed that a settlement of the Justice Department case could be "potentially costly."
S&P said that given the district's overall level of unrestricted reserves and financial flexibility, "it would take a very large settlement to cause a rating change, although we will evaluate the rating once any settlement is publically announced."
Moody's Investors Service assigns ratings of A2/VMIG-1 to the district's bonds, with a negative outlook.
