Health Care

Broward Health pays nearly $70 million to settle fraud case; whistleblower named

Michael Reilly, an orthopedic surgeon from Fort Lauderdale, was the whistle blower in a lawsuit that alleged fraud at Broward Health, the public hospital system for North Broward. Reilly's suit sparked a federal investigation of the hospital system, and on Tuesday the U.S. Department of Justice accepted a $69.5 million payment from Broward Health to settle charges of healthcare fraud.
Michael Reilly, an orthopedic surgeon from Fort Lauderdale, was the whistle blower in a lawsuit that alleged fraud at Broward Health, the public hospital system for North Broward. Reilly's suit sparked a federal investigation of the hospital system, and on Tuesday the U.S. Department of Justice accepted a $69.5 million payment from Broward Health to settle charges of healthcare fraud.

Federal officials Tuesday revealed the identity of a Fort Lauderdale orthopedic surgeon who blew the whistle on illegal physician kickbacks, complicit hospital administrators and negligent financial oversight at taxpayer-supported Broward Health, leading the public hospital system to pay nearly $70 million to settle charges of healthcare fraud.

Michael Reilly, an orthopedic surgeon in private practice, said he felt vindicated Tuesday after the U.S. Department of Justice announced the fines stemming from a federal investigation launched after Reilly first filed suit in April 2010. He will receive $12 million from the financial recovery.

“Someone had to stop this machine,” said Reilly, who added that he first raised concerns about the improper physician payments to the hospital’s board of directors and administrators in 2003.

Reilly alleged in his lawsuit, which was unsealed Tuesday, that Broward Health administrators awarded employment contracts to a group of top physicians, including cardiologists and other specialists, that paid the doctors more than fair market value based on their ability to increase patient referrals to the hospital system, in violation of federal law.

Not only were physicians improperly compensated based on their volume of patient referrals, Reilly said, they also were penalized for referring uninsured patients — discouraging the doctors from caring for the indigent, one of the primary missions of Broward Health, which receives about $150 million a year in local property taxes.

“That’s pretty sad for a government-supported hospital,” Reilly said.

The federal laws allegedly violated by Broward Health were designed to deter financial relationships between hospitals and doctors that could improperly influence physicians’ decisions about where to refer their patients for care.

“Those relationships can alter a physician’s judgment about the patient’s true health care needs and drive up health care costs for everybody,” Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, said in a written statement announcing the settlement.

In addition, federal law prohibits hospitals from filing claims with government insurance programs such as Medicare and Medicaid for services to patients who were referred by a physician with an improper financial relationship.

Broward Health, which admitted no wrongdoing in the agreement, issued a written statement Tuesday noting that new leadership had put the federal investigation behind the $1 billion-a-year healthcare system, which includes four acute care hospitals, numerous outpatient clinics and other medical facilities throughout the county.

Nabil El Sanadi, an emergency room physician, was appointed CEO of Broward Health in December 2014. He said Tuesday that he had taken the necessary steps to reform the public hospital system.

“We closed that chapter, and as a healthcare system, we’re here to provide superb healthcare,’’ said El Sanadi, who also is a member of the Florida Board of Medicine, which oversees physicians and healthcare professionals in the state.

Reilly, who said he first learned of the physician payment practices after turning down a lucrative contract offer from Broward Health in 2000, added that he alerted the hospital system’s governing board numerous times about the improper arrangements.

Said his attorney, Bryan Vroon: “They ignored him.’’

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