A subsidiary of Universal Health Services Inc. has agreed to pay $27.5 million to settle allegations that it illegally paid compensation to doctors to refer patients to its hospitals. The unit, McAllen Hospitals LP, which does business as South Texas Health System, allegedly disguised the payments as sham contracts, including medical directorships and lease agreements, between 1999 and 2006, according to the U.S. Justice Department.
The company also entered into a five-year agreement that requires it to set up a system for tracking and evaluating financial arrangements between its healthcare facilities and referral sources. Tony West, Assistant Attorney General for the Justice Department’s civil division, said in a statement:
Improper financial relationships between healthcare providers and their referral sources can corrupt a physician’s judgment about the patient’s true healthcare needs.
Fraud in Corporate America is bad generally, but when the fraud is in a healthcare setting, it’s especially troubling and can’t be tolerated. Unfortunately, this type conduct has become commonplace and most folks don’t even know it.
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