Court rejects physician's claims that Pottstown Memorial violated Anti-Kickback and False Claims Act

By Robert Lawson | Jun 28, 2016

PHILADELPHIA – The U.S. Court of Appeals recently rejected surgeon Alan Cooper's claim that his on-call contract termination by Pottstown Memorial Medical Center (PMMC) violated the Anti-Kickback Statute and False Claims Act.

Cooper alleged the hospital violated the Anti-Kickback Statute because its motivation was to keep him on-call to refer Medicare patients exclusively to its facility, causing it to also violate the False Claims Act because claims were falsely certified. 

Judge Richard Lowell Nygaard wrote in an opinion released June 10 that Cooper's claim did not meet the requirements of the law applied to Anti-Kickback Statute and False Claims Act violations. 

Pottstown Memorial Medical Center   Creative Commons Image by Mr Xaero, 2011

Norman G. Tabler Jr., a health care lawyer in Indiana, said the physician was basically grasping at straws to save his case. 

"His problem was that he was attacking what is really a standard arrangement for hospitals that use on-call contracts," Tabler told the Pennsylvania Record. "If he succeeded in this case, then most of these kinds of contracts would be illegal, but he obviously didn't."

Tabler said Cooper's theory was basically that because PMMC fired him due to his relationship with another hospital, it must be because PMMC wanted his referrals and that this would prove his case.

"The simple fact that a payment was made to Cooper as remuneration (implying that services were rendered) is not fatal to his claim," Nygaard wrote in the opinion.  

Under the False Claims Act, it must be proven that claims for payment by the government were known to be false or fraudulent, but Cooper admitted in court that he was not being paid for any referrals as part of his on-call contract to the hospital. 

The court also stated that since Cooper didn't allege PMMC's contracts were of no legitimate business need nor was there evidence he was being paid significantly above market value for his contract, the hospital was engaged in a standard business contract. 

Cooper previously was employed full-time as a surgeon by PMMC, but entered into an on-call contract with the hospital as an orthopedic surgeon in 2010. He said the hospital terminated the contract when he refused to divest his interest in another surgical facility. 

In 2011, he signed another on-call contract with PMMC that allowed him to keep his interest in the other surgical center, but forbid him from working at any other competing medical center within 30 miles of PMMC. 

When Cooper started working at St. Joseph's Hospital, PMMC canceled the on-call contract as well. The court disagreed that the contract was part of a scheme by PMMC to refer patients, instead ruling it was a standard business contract.

Additionally, the on-call contract involved a non-compete agreement as well as language that allowed either party to terminate the contract without cause. Tabler said most of these kinds of cases do not go very far in court under similar circumstances, but every now and then a court rules in favor of the plaintiff in the case. 

"It does happen," Tabler said. "Sometimes it can be successful if they can prove that they provided no real services other than providing referrals to the institution. That wasn't the case here."

Tabler explained the simple logic in the court's assessment of the appeal.

"In the court's opinion, no money was received that was above fair market value for that arrangement," Tabler said. "If a guy in his position could prove the money paid was way above market, that would be evidence the hospital was paying for something else. Referring all his patients there would be illegal."

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