BNA’s Health Care Daily Report, September 11, 2014 – Meridian Surgical Partners Reaches Settlement Over Kickback Allegations

On Behalf of | September 11, 2014 | Working for Justice Blog

Meridian Surgical Partners LLC will pay the federal government $3.3 million along with an additional $1.8 million in attorneys’ fees to settle allegations that it paid illegal kickbacks for referrals, parties to the case told Bloomberg BNA Sept. 10 (United States ex rel. Simmons v. Meridian Surgical Partners LLC, M.D. Tenn., No. 3:11-cv-349, 9/2/14).

The qui tam complaint claimed that the transactions at issue, involving payments to physicians for ownership interests, violated federal anti-kickback laws, rendering the company’s Medicare reimbursement claims illegal under the False Claims Act.

As part of the settlement, Meridian expressly denied the allegations included in the whistle-blower lawsuit atissue. The Brentwood, Tenn.-based operator of outpatient ambulatory surgery centers said it decided to settle the matter to avoid the cost and ‘‘distractions’’ of further litigation.

Sales of Interest in Surgical Center. The lawsuit at issue was filed with the U.S. District Court for the Middle District of Tennessee in May 2011 by Thomas Reed Simmons, who had worked as a business manager for an ambulatory surgical center in Florida that was managed and principally owned by Meridian.

Simmons claimed in the qui tam lawsuit that Meridian illegally paid kickbacks to physicians for referrals through inflated returns on their investment in Treasure Coast Surgery Center in Stuart, Fla., to which they referred patients. The whistle-blower alleged that Meridian, Treasure Coast and other surgical centers were involved in the kickback scheme, in violation of federal anti-kickback law and the False Claims Act.

In September 2012, the federal government filed a notice with the court that it had elected not to intervene. In May 2013, the court denied Meridian’s motion to dismiss the lawsuit, but dismissed claims against other defendants as unsupported by the evidence presented.

The case had been scheduled to go to trial Sept. 23. Government Didn’t Intervene. An attorney for Simmons said the settlement shows that whistle-blowers can successfully pursue qui tam cases even when the government declines to join in the lawsuit. Simmons will receive nearly $1 million as his part of the settlement.

‘‘This settlement reaffirms that Relators who choose to pursue their claims after the Government has declined to intervene can achieve successful results,’’ according to Michael D. Palmer, an attorney with Sanford Heisler’s law offices in New York. ‘‘While we were fully prepared to take this case through trial, we are pleased with the recovery obtained on behalf of Mr. Simmons and the government,’’ he said.

John Wilson, Meridian’s chief executive officer, said in a statement provided to Bloomberg BNA Sept. 10 that the company denied the allegations but decided to settle the matter to avoid further litigation.

‘‘While the allegations in the lawsuit were completely without merit, we chose to settle this action to avoid the financial costs and distractions that would come with further legal proceedings,’’ according to Wilson. ‘‘We are pleased the Government declined to intervene in this lawsuit and we are pleased to have the lingering litigation with the relator behind us and have our sights on a variety of strategic opportunities for our growing company,’’ he said.To contact the reporter on this story: Andrew M. Ballard in Raleigh, N.C., at [email protected] To contact the editor responsible for this story: Ward Pimley at [email protected]