Stark Law Violations Lead to $1.7M Settlement
DOJ alleges above-market rental arrangements with referring physicians from 2014 to 2020
The central issue in this case is not a broader compliance trend, but whether specific financial arrangements met regulatory requirements.
Trinity Hospital Holding Company agreed to pay $1.7 million to resolve allegations that it maintained improper financial relationships with two referring physicians through office space rental arrangements that exceeded fair market value. The alleged conduct spanned from 2014 to 2020, according to the Department of Justice.
The hospital disclosed the arrangements following an internal review and independent investigation, and the government credited Trinity for taking remedial action and cooperating with the investigation.
The Stark Law prohibits hospitals from billing for certain services referred by physicians with whom they have a financial relationship unless the arrangement meets specific statutory or regulatory exceptions, including fair market value requirements.
According to the DOJ, the rental arrangements at issue did not meet those requirements because they exceeded fair market value. The claims resolved in the settlement are allegations only, and there has been no determination of liability.
As the Justice Department stated, the law is intended to ensure that medical decision-making is not influenced by physicians’ financial interests, while also recognizing cooperation and self-disclosure in resolving such matters.
Source: US Department of Justice
DEA Suspends Tennessee Pharmacy’s Controlled-Substance Authority
Emergency order takes effect immediately while proceedings continue
The U.S. Drug Enforcement Administration has issued an Immediate Suspension Order to A+ Pharmacy, a retail pharmacy in Chattanooga, Tennessee, stating that the action was based on an “imminent danger to public health or safety.”
The order immediately suspends the pharmacy’s authority to handle controlled substances. Under federal law, the suspension remains in effect during the administrative process unless it is withdrawn or dissolved.
According to the DEA, the action followed a joint investigation by DEA diversion investigators and the Tennessee Board of Pharmacy that identified compliance discrepancies and violations of the Controlled Substances Act.
The DEA describes an Immediate Suspension Order as an emergency administrative action that immediately suspends a registrant’s authority to handle controlled substances when the agency determines there is an imminent danger to public health or safety. DEA administrative-action guidance says such action may be taken when there is “imminent danger to the public health or safety,” which federal law defines more specifically as a substantial likelihood of an immediate threat of death, serious bodily harm, or abuse of a controlled substance absent immediate suspension.
In the release, DEA Louisville Field Division Special Agent in Charge Jim Scott called the investigation’s findings “nothing short of egregious” and said additional allegations would be made public later. That characterization is the agency official’s statement, not an independently established fact.
Source: US Drug Enforcement Administration
Fraud Scales Faster Than Oversight
A temporary policy gap enabled large-scale abuse in a Medi-Cal scheme
A California man pleaded guilty to submitting nearly $270 million in fraudulent Medicaid claims over an 11-month period, exploiting a temporary suspension of prior authorization requirements in California’s Medi-Cal program.
Working with a pharmacist, a nurse practitioner, and patient marketers, the scheme involved billing for high-reimbursement medications that were medically unnecessary or, in many cases, never provided. Prosecutors say the operation resulted in at least $178 million in payments.
Court documents describe how the group used customized formulations of low-cost generic drugs that were not subject to existing reimbursement caps, billing thousands of dollars per prescription—including more than $13,000 for a medication that typically costs between $5 and $25.
The scheme also relied on illegal kickbacks and prescriptions signed without patient evaluation, underscoring that the activity involved multiple layers of fraud beyond billing practices alone.
The case centers in part on Medi-Cal’s temporary suspension of prior authorization requirements during a transition to a new payment system. While the policy change was intended to streamline access, it effectively reduced a key verification step.
The case illustrates how the removal of a control—even temporarily—can create conditions where fraudulent billing may expand rapidly before oversight mechanisms respond.
It also highlights a broader operational challenge: systems that enable billing can scale quickly, while detection and review processes may take longer to identify irregularities.
As policymakers consider changes aimed at improving access, the case raises questions about how monitoring systems can keep pace during periods of transition.
“This defendant used a public health program as his personal piggy bank,” prosecutors said.
Source: US Department of Justice
