In December of 2016, 21 individuals, including the founders and investors of a physician-owned medical center in Dallas, Texas, were indicted by a grand jury and charged with an assortment of felony offenses stemming from their payment and/or receipt of over $40 million in bribes and alleged kickbacks. The now defunct operation, Forest Park Medical Center (FPMC), billed patients’ insurance plans and some federal health care programs over half a billion dollars and collected over $200 million in paid claims over the course of its operations from 2009 through 2013.

The FPMC executives employed a fairly direct and simple plan to bill for services which collected millions of dollars. The founders and executives decided to operate FPMC as an “out-of-network” hospital and “marketing fees” (characterized by the indictments as bribes and alleged kickbacks) to surgeons, primary care physicians, chiropractors, lawyers, workers’ compensation preauthorization specialists, and others to induce them to funnel patients to FPMC’s facility. Those patients were primarily those with high-reimbursing out-of-network private insurance benefits or benefits under federally-funded health care programs like FECA, TRICARE, Medicare and Medicaid. The government contends, the alleged kickbacks were funneled through several shell companies and referred to as “marketing” expenses. Some of the kickback recipients received in excess of $7 million.

As is usual in these cases, the defendants were charged with a number of federal offenses, including charges under the federal Anti-Kickback statue, aiding and abetting, and money laundering.  However, in a novel charging tactic, the U.S. Attorney for the Northern District of Texas has also invoked the Travel Act (18 U.S.C. §§1952 and 2). The Act bars the use of the U.S. mail and interstate or foreign travel for the purpose of engaging in certain specified criminal acts. The specified acts include bribery in violation of the laws of the state in which the acts are committed. In this case, federal prosecutors are hinging at least part of the charges on the Texas Commercial Bribery Statute.

Defense attorneys for several of the FPMC defendants are now crying foul, arguing that the charges under the Travel Act should be dismissed because the Act was never intended to be used as an enforcement tool against health care providers and that the Anti-Kickback statute presents the only means for the government to pursue bribery and alleged kickback charges in matters involving federal health care programs. They have also put forth the argument that the Anti-Kickback Statute was not violated in this case because the hospital was structured only to serve self-pay or privately insured patients—not those insured under federal health care plans—and that any such patients that did undergo treatment at the facility were unknown to the defendants. In other words, the hospital was set up to rely on the safe harbors of the Anti-Kickback Statute since it had no intention of serving patients covered under federally funded  health care programs.

The FisherBroyles Health Care and Pharmacy Law team will continue to track this case given the nature of the indictments and the charges under the Travel Act, reporting further news as the situation warrants.  This is another example of healthcare providers having to be aware of how the federal government is prosecuting healthcare cases to ensure healthcare business and operations are established or operating within compliance of state and federal law.  We welcome your questions, so please do not hesitate to contact any one of the following attorneys:

Brian E. Dickerson

Anthony Calamunci

Nicole Hughes Waid

Amy Butler

Katy Wane