Press Release from the U.S. Dept. of Justice
April 21, 2015
ATLANTA – Family Dermatology, P.C., which owns and operates a dermatopathology laboratory in Georgia and a number of dermatology practices throughout the Eastern United States, has agreed to pay the United States $3,247,835 plus interest to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with a number of its employed physicians, the Justice Department announced today.
“The defendants financed the expansion of their business across the Eastern United States with improper financial arrangements that resulted in illegal referrals and, ultimately, inflated payments from Medicare,” said Acting U.S. Attorney John Horn. “We expect providers to follow the law and will pursue those who do not.”
The settlement resolved allegations that financial relationships that Family Dermatology and its affiliates had with a number of their employed physicians violated the Stark Statute and the False Claims Act. The Stark Statute restricts the financial relationships that health care providers may have with doctors who refer patients to them. Family Dermatology employs a number of dermatologists as independent contractors and it has routinely required them to use Family Dermatology’s in-house pathology lab, which operated under the name Nelson Dermatopathology, for their pathology services. The government alleged that Family Dermatology’s financial relationships with a number of these physicians did not comply with the requirements of the Stark Statute, and that Family Dermatology improperly billed Medicare for dermatopathology analyses performed by Nelson Dermatopathology on specimens that were sent to the laboratory by these employed physicians.
The allegations settled arose from three separate lawsuits filed by three whistleblowers, Scott M. Ross MD, Mark F. Baucom and Harold Milstein MD provisions of the False Claims Act. Private citizens can bring suit on behalf of the government for false claims and share in any recovery. The whistleblowers will collectively receive more than $584,000 from the recovery announced today.