South Dakota hospital to pay millions to settle kickback schemes

Alleged behavior of physician-owned group occurred over at least five years

A Dakota Dunes surgical hospital and its partial owner have agreed to pay $12.7 million to resolve allegations that they engaged in a kickback scheme to generate profits in violation of federal False Claims Act violations.

Dunes Surgical Hospital and United Surgical Partners International made financial contributions to an affiliated nonprofit group of physicians who then referred patients to Dunes for medical services. The money contributed by Dunes Surgical funded the salaries of athletic trainers who then referred patients for services at the surgical hospital, a violation of the Anti-Kickback Statute.

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The allegations also included a kickback scheme in which Dunes provided another physician group with below market clinic space, supplies and staff. The government alleged the arrangement violated the Stark Law. The law prohibits doctors and medical providers from receiving money for services referred by other physicians who have a financial relationship, unless that relationship falls under a “safe harbor” exemption within the Stark Law.

The government alleges the behavior started on at least July 1, 2014 and continued through 2019.

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