Memorial Agrees to Civil Settlement Following OIG Inquiry

(April 24, 2008) — Memorial Health confirmed today that it has entered into a civil settlement agreement with the United States Department of Justice and the United States Department of Health and Human Services, Office of the Inspector General, to resolve an investigation into the compensation practices for certain physicians employed by Memorial.

The civil settlement includes a $5.08 million payment by the hospital system, along with a Certification of Compliance Agreement (“CCA”). Under the CCA, Memorial commits to continue its already substantial compliance program for a period of three years. The hospital system cooperated fully with the government’s investigation, and Memorial’s agreement to the settlement terms did not include any admission of wrongdoing.

“The investigation is complete, and this settlement puts the issue behind us,” said board chairperson Karen Pannell. “We don’t agree with the government’s allegations, but it is in the best interest of our hospital and our community to settle this issue now and move forward. Memorial remains committed to being faithful stewards of our core mission as a healthcare institute.”

The investigation centered on regulatory aspects of the “Stark Law” which governs a hospital’s financial relationships with physicians, including employed physicians, who refer Medicare patients to the hospital. William Daniel, Vice Chairman of the Memorial Board of Directors said the financial resources and staff time necessary to further defend the hospital’s position “could not be justified when weighed against the hospital’s primary health care role in the community.”

“We disagree with the government's assertions but agreed to the settlement in order to bring a distracting and enormously expensive issue to a close,” said Daniel.

The complexity of regulatory compliance issues and dynamic nature of healthcare delivery and funding have resulted in an increased number of regulatory compliance investigations in recent years. The hospital joins a long list of systems across the nation receiving similar settlements, including several in Georgia (Piedmont Hospital; Northside Hospital; St. Joseph’s, Atlanta; Tanner Medical Center, Carrollton; Colquitt Regional Medical Center, Moultrie).