Deeper Than the Headlines: $40 Million Bribe And Kickback Scheme Explained

At the end of 2016 I posted a blog about the unsealing of an indictment of 21 individuals allegedly involved in a $40 million bribe and kickback scheme involving Forest Park Medical Center Dallas (FPMC).

The indictment alleged that FPMC paid approximately $40 million in bribes and kickbacks to surgeons, primary care physicians, chiropractors, lawyers, workers' compensation preauthorization specialists, and others in exchange for those individuals referring certain patients to FPMC.

My parting comment was it would be interesting to watch this case proceed over time. And it seems that the time for a little update is now.

On March 17, 2017, one of the indicted physicians, Richard Ferdinand Toussaint, Jr., pleaded guilty to one count of conspiracy to pay healthcare bribes and kickbacks and one count of offering or paying illegal remuneration. Toussaint faces a maximum statutory penalty of five years in federal prison and a $250,000 fine for each count. Sentencing will be scheduled at a later date.

Some of the court documents and DOJ press releases associated with this guilty plea shine a little more light on the story than what was posted last December on the blog. Toussaint, an anesthesiologist, met one of the co-defendants (Dr. Barker) around 2003 and began providing anesthesia services for his cases in 2005. A few years later, Toussaint and Barker decided to start their own physician-owned hospital, Forest Park Medical Center (FPMC). FPMC focused on bariatric and spinal surgeons because their surgeries generated the most money. The original plan was for FPMC to go in-network with the major insurance carriers when possible. Instead, FPMC attempted to negotiate better reimbursement rates and remained out-of-network so it could collect more in reimbursements.

All of the founders at FPMC knew that FPMC paid surgeons marketing checks in exchange for bringing surgeries, especially lucrative out-of-network surgeries, to FPMC as opposed to other facilities. One of the co-defendants (Beauchamp) discussed the details of the payments with each doctor, and he kept tabs on how many surgeries they brought to FPMC. Beauchamp used a metric to calculate the payments based on the surgeon's anticipated case volumes at FPMC. The payments quickly grew from $300,000 a month to $1.2 million a month.

To entice patients with both in-network and out-of-network benefits to come to FPMC, and to facilitate the bribe and kickback payments, FPMC systematically waived coinsurance or reduced it to in-network levels. According to Toussaint, this practice was concealed or misrepresented to insurance carriers so they would not refuse to reimburse the hospital. FPMC also made bribe and kickback payments to chiropractors to induce them to send their patients that needed surgery to FPMC as opposed to other facilities. Toussaint would often meet with chiropractors for these discussions and there was a clear quid-pro-quo, that is, the chiropractors were paid to refer their patients to FPMC.

In addition to paying surgeons bribes and kickbacks for cases being performed at FPMC in the form of marketing money, FPMC also used the opportunity to invest in FPMC, and the number of investment units a surgeon could purchase, to induce surgeons to bring their patients to FPMC. The more surgeries a surgeon could bring to FPMC, the more they were allowed to invest and profit from the hospital’s billings. The co-defendants often decided how many shares a surgeon should be able to purchase based on the number of surgical cases the surgeon could steer to FPMC. Surgeon-investors who did not bring enough surgical cases to FPMC were divested or their shares were cut.

And this is where compliance comes in. Financial relationships between physicians and hospitals is an area that compliance programs should address. Starting with strong policies is an important first step. But policies alone do not a compliance program make. Education and training as well as auditing and monitoring of such relationships also needs to occur. And like any good compliance program, corrective and disciplinary action must be taken if noncompliance is identified.