Press Releases

Steward Health Care System to Settle Medicare and Medicaid Kickback Allegations for $4.7 Million

June 9, 2022

BOSTON, MASSACHUSETTS – The United States and the Commonwealth of Massachusetts (collectively, “the Government”) have reached a settlement (the “Settlement”) of approximately $4.7 million with the Steward Health Care System LLC (“Steward”).  This settlement arose as a consequence of the Government’s investigation of allegations contained in a False Claims Act complaint (“the Complaint”) filed by three relators. Steward is the largest, private, for-profit healthcare network in the country and owns and operates multiple hospitals in Massachusetts and other states.

The whistleblowers, including Stephen M. Zappala, MD, and Olivia Lanna, MD MA, filed their lawsuit on behalf of the Government in the U.S. District Court for the District of Massachusetts in 2018. They were represented by Jeanne Markey and Gary Azorsky of Cohen Milstein Sellers & Toll PLLC based in Washington D.C. and Lisa Arrowood and Sarah Sousa of Arrowood LLP based in Boston, MA.

The whistleblowers alleged, among other things, that Steward had both provided payments to specialists, such as urologists, for services which were not performed, and rented space from providers in order to induce patient referrals to its Accountable Care Organization.  Under the terms of the Settlement, neither the federal nor state government takes any position as to the violations of the False Claims Act alleged in the Complaint, and as part of the resolution of this matter the Complaint is being voluntarily dismissed.

As part of the Settlement, Steward admits and accepts responsibility for three categories of conduct which it voluntarily disclosed to the Government. First, Steward disclosed to the Government that it had “failed to charge the proper rent” on leases it had with approximately 50 physicians, physician organizations and non-physician organizations resulting in rent payments below fair market value. It thereby may have violated the anti-kickback statute or the Stark Law prohibiting physician self-referrals. Second, Steward disclosed to the Government that the Steward Good Samaritan Medical Center, Inc., (“GSMC”) entered into a compensation arrangement with Dr. Bahige Asaker for services that Steward cannot confirm were performed and thereby may have violated the anti-kickback statute. Third, Steward disclosed to the Government that GSMC entered into arrangements with two urology centers, Brockton Urology Clinic and Adult & Pediatric Urology Center, P.C. for specified services that were not provided.

“Our healthcare system is meant to function as a dedicated servant to its patients and employees alike,” said Gary Azorsky, partner at Cohen Milstein Sellers & Toll. “Settlements such as this one serve to facilitate this important goal.”

The Settlement provides that Steward will pay the Government $4.7 million. After receipt of payment, the Government shall pay a relator’s award of approximately $725 thousand dollars to be split among the three whistleblowers. Also under the terms of the Settlement, GSMC and the Office of the Inspector General for the Department of Health and Human Services (OIG-HHS) shall enter into a Corporate Integrity Agreement.

“My role as a physician is to uphold the integrity of the healthcare system and provide an environment that is committed to the health of our patients. This settlement will forge a brighter path for healthcare,” said Olivia Lanna, MD MA, one of the three whistleblowers in the case.

Cohen Milstein’s Whistleblower/False Claims Act practice group has decades of experience successfully pursuing whistleblower cases under the federal and state false claims act statutes in the healthcare, pharmaceutical, and defense contractor industries, and in other industries that transact business with the government, as well as cases arising under the S.E.C. and I.R.S. whistleblower programs.

In 2016, Cohen Milstein represented one of two whistleblowers in the United States et al. ex rel. Lauren Kieff, v. Wyeth, which resulted in one of the largest qui tam settlements in U.S. history – Wyeth agreed to pay $784.6 million to the U.S. government and the over 35 intervening states.

To learn more about Cohen Milstein’s Whistleblower/False Claims Act practice group visit the practice group’s webpage here.

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About Cohen Milstein

Cohen Milstein Sellers & Toll PLLC is recognized as one of the premier law firms in the country handling major, complex plaintiff-side litigation. With more than 90 attorneys, Cohen Milstein has offices in Washington, D.C., Chicago, Ill., New York, N.Y., Palm Beach Gardens, Fla., and Philadelphia, Pa.  For additional information, visit www.cohenmilstein.com or call 267-479-5700.

About Arrowood

Arrowood LLP is a nationally-recognized law firm based in Boston, Massachusetts. Our attorneys are among the most elite and highly respected trial lawyers in the state. We regularly – and successfully – litigate against the largest and best known law firms in the country. Regardless of the practice area, Arrowood LLP provides our clients with the flexibility and efficiency that only a boutique firm can offer.