A Pennsylvania federal judge recently dismissed a Qui Tam case brought by an orthopedic surgeon against Pottstown Medical Specialists, Inc. (PMSI) claiming that the physician presented an “implausible” supposition. Dr. Alan Cooper claimed that Pottstown Medical Specialists, Inc. terminated his on-call contract at Pottstown Hospital because he was allegedly contracted for the purpose of referring Medicare and Medicaid patients to the hospital, which is in violation of the federal Anti-Kickback Statute.
Cooper had entered into two different contracts with PMSI, one in 2010 and another in 2011. The first on-call contract was terminated by PMSI when Cooper became involved in a financial relationship with a competing surgical center, which they claimed violated a non-compete clause in his contract. The second on-call contract allowed Dr. Cooper to keep his stake in the surgical center, but added a non-compete clause prohibiting him from working with another medical institution within a 30 mile radius of the Pottstown Hospital, without prior approval from PMSI. The second contract was terminated when PMSI discovered that Dr. Cooper violated the restrictive covenant in his contract by working for another competitor.
Dr. Cooper then filed an Anti-Kickback Statue suit against PMSI under the False Claims Act alleging that the real reason his second contract was terminated was due to his failure to provide Pottstown Hospital with referrals. What Dr. Cooper failed to prove was that Pottstown Medical Specialists, Inc. willfully intended to contract him for the purpose of Medicare and Medicaid referrals during contract negotiations. Dr. Cooper claimed that he was manipulated into believing that his above average compensation offered by PMSI was for his orthopedic services to the hospital, and not for the purpose of referrals.
Further damaging Dr. Cooper’s claim was the fact that PMSI allowed Cooper to keep his financial relationship with the competitor in the second on-call contract. This agreement was in contrast to Cooper’s claims, since allowing him to do so limited referrals that would be made to Pottstown Hospital. The court also found that Cooper had signed papers stating that his compensation in the on-call contract was not contingent upon his referrals to Pottstown Hospital.
PMSI’s motion to dismiss the Qui Tam case was granted because the court recognized that Cooper failed to prove illegal intent by the firm during the contract negotiations, and instead claimed that the alleged criminal intent occurred several months after his contract was implemented.
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