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Whistleblower Seeks Stark Law Win In Hospital Kickback Suit

Law360, New York (October 9, 2014, 4:41 PM EDT) -- A whistleblower on Wednesday urged a Pennsylvania federal court to grant partial summary judgment on his Stark Law claim that a hospital had a professional relationship with a group of cardiologists, to establish the foundation for his qui tam suit over an alleged kickback scheme involving false Medicare claims. In his motion, cardiologist Tullio Emanuele said the undisputed evidence showed western Pennsylvania’s Hamot Medical Center and a group of cardiologists with whom he once practiced had a professional relationship that violated the Stark Law, so there was no reason to wait until trial to decide on that issue.

“It’s time for hospitals to pay attention to the Stark Law," Emanuele's counsel Andrew M. Stone told Law360. "This issue lends itself to summary judgment because the Stark Law is so specific in its requirements, and the parties exhibited noncompliance with the basics of the statute on a consistent basis over many contracts.”

The Stark Law, a provision of the Social Security Act, prohibits Medicare claims for procedures referred to a hospital by physicians who have a direct financial relationship with the hospital, to prevent unnecessary medical procedures. It also forbids Medicare from paying these claims. “Thus,” Emanuele said, “a claim submitted in violation of the Stark Law is the quintessential ‘false claim.’”

Emanuele’s 2012 complaint accused Hamot Medical Center, Medicor Associates Inc., Flagship Cardiac Vascular Thoracic Surgery and several doctors of submitting false claims for unnecessary medical procedures and violating anti-kickback laws by creating sham medical directorships to which only Medicor and Flagship physicians would be appointed.

According to Emanuele’s motion, these sham directorships created a financial relationship between the hospital and the cardiologists that would forbid them from referring to one another under the Stark Law without valid, express written agreements that could exempt the directorships from the statute. These financial relationships went at least as far back as Dec. 4, 2007, the motion alleged. Emanuele’s motion said the only way Hamot Medical Center and the doctors could get around the Stark Law was through a “personal services arrangement” exemption, which had to be in writing, signed by all the parties, and for a term of at least one year. Such an arrangement had to exist at the time of any referrals, and could not be written and backdated to retroactively comply with the law.

According to Emanuele’s motion, the medical providers had no such valid agreement in place from Dec. 4, 2007 through March 31, 2010, because the agreements they had were alternately backdated “addendums,” written for terms of under one year, that failed to cover all of the relationships or failed to cover all the services provided.

In July, U.S. District Judge Sean McLaughlin ruled the doctor’s complaint didn’t reach the level of factual specificity required by federal rules for Flagship and Donald Zone.

One of the lawyers representing Emanuele is Jamie Bennett, who was the assistant U.S. attorney in Maryland who negotiated a $22 million settlement with St. Joseph Medical Center in a similar case alleging kickbacks to a cardiology group.

Emanuele is represented by Andrew M. Stone of the Stone Law Firm LLC, G. Mark Simpson of Simpson Law Firm LLC and Jamie M. Bennett of Ashcraft & Gerel LLP.

Medicor is represented by Neal R. Devlin of Knox McLaughlin Gornall & Sennett PC. Flagship is represented by James D. McDonald and Gary D. Bax of The McDonald Group LLP. Hamot is represented by David B. White, Stephen S. Stallings, Brian M. Mancos and Laura E. Caravello of Burns White & Hickton LLC.

The case is Tullio Emanuele v. Medicor Associates Inc. et al., case number 1:10-cv-00245, in the U.S. District Court for the Western District of Pennsylvania.

--Additional reporting by Drew Singer and Jeff Overl

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