Florida’s BayCare Health System Avoids Fraud Lawsuit

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By Eric Topor

A Florida hospital system has been was spared a trial with a False Claims Act whistle-blower because there was no evidence showing an improper relationship with referring physicians ( United States ex rel. Bingham v. BayCare Health Sys. , 2017 BL 126597, M.D. Fla., No. 8:14-cv-73, 4/18/17 ).

The U.S. District Court for the Middle District of Florida adopted a magistrate judge’s recommendation to grant Clearwater, Fla.-based BayCare Health System’s motion for summary judgment on all FCA counts brought by whistle-blower Thomas Bingham. Bingham, a real estate appraiser who is unaffiliated with BayCare, alleged that BayCare tried to induce Medicare referrals from physicians located in a medical office next to a BayCare hospital by allowing those physicians and their patients free use of a BayCare parking garage. He also alleged BayCare bestowed the garage’s tax exemptions to another physician practice group in a separate BayCare-owned medical office building.

Bingham’s allegations that BayCare utilized compensation through real estate sources to induce Medicare referrals to a provider is somewhat unusual, though the Stark physician self-referral law does include specific real estate and lease requirements as an acknowledgment that they can be avenues for fraudulent relationships. The Department of Justice has, in past FCA prosecutions, aggressively pushed legal arguments that physician compensation levels alone can be an indicator of an intent to induce referrals. In this case, however, the court found no evidence that BayCare had any such intent.

Judge Steven D. Merryday’s brief one-paragraph ruling adopted the magistrate judge’s recommendation to find in favor of BayCare due to lack of any evidence of a direct or indirect compensation arrangement between BayCare and the referring physicians that was based on or intended to induce Medicare referrals. Trial had been tentatively scheduled to begin this month, and the parties were in the final stages of submitting trial briefs and jury instruction recommendations when Merryday issued his ruling.

Jonathan Kroner represented Bingham and told Bloomberg BNA April 19 that the magistrate judge’s report “was very fact specific to the unique circumstances surrounding these medical office buildings,” suggesting that the application of this ruling to other FCA cases will be limited. Kroner, a solo practitioner who represents FCA whistle-blowers in Miami, declined to comment on whether an appeal would be forthcoming.

Bloomberg BNA contacted the representative counsel for BayCare for comment on the court’s decision but didn’t receive any response.

Physician Pay Ties Absent

Merryday didn’t elaborate on Magistrate Judge Julie S. Sneed’s recommendation in his order adopting the report, but Sneed made clear that Bingham failed to find any evidence tying the compensation paid to the physicians receiving the alleged improper parking and tax benefits to any Medicare referrals they made to BayCare.

Sneed noted that the lease provision granting free parking to physicians and their patients was included in a ground lease between BayCare and the medical office building’s owner, which was the landlord of the physicians employer. Sneed said there was no direct financial relationship between BayCare and the referring physicians that might implicate the Stark law in this respect.

Sneed further rejected the notion that an improper indirect financial relationship was created through the parking concessions because the physicians’ compensation wasn’t based in any way on how many referrals were made to BayCare. Bingham made the argument that the parking concessions made the office lease terms with the physician practice well below market rate, but Sneed said the only evidence of market value came from BayCare’s expert showing that the building lease terms took parking into account.

There wasn’t any evidence that the tax abatement credits at issue, which were found to have been improperly granted by the county assessor, were intended to induce referrals either, Sneed said. Sneed noted that the physician practice’s lease required the practice to pay any property taxes owed (abated or not) which it had been doing since the assessment was corrected.

Weidner & Associates APC, Jonathan Kroner in Miami and the Warren-Benson Law Group represented Bingham. Baker, Donelson, Bearman, Caldwell & Berkowitz PC represented BayCare Health System.

To contact the reporter on this story: Eric Topor in Washington at etopor@bna.com

To contact the editor responsible for this story: Peyton Sturges at psturges@bna.com

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