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The operator of two Queens hospitals has reached a settlement for allegedly defrauding a government program.

MediSys Health Network Inc., which owns and operates Flushing Hospital Medical Center and Jamaica Hospital Medical Center, agreed to pay $4 million to settle after it allegedly violated the False Claims Act by engaging in improper financial relationships with referring physicians.

“Health care providers who enter into improper financial relations with referring physicians compromise the referral process and encourage over-utilization of services, to the potential detriment of both patients and taxpayers. We will hold health care providers accountable for their violations of federal law.” stated Acting U.S. Attorney Bridget M. Rohde.

An investigation found that MediSys Health Network Inc. had submitted false claims to Medicare from patients who were referred by physicians that the company had improper financial relationships. These relationships took the form of compensation and office lease arrangements that did not comply with the requirements of the Stark Law, which restricts the financial relationships that hospitals may have with doctors who refer patients to them.

The allegations were brought to light by the government when a complaint was filed in regards to the qui tam provisions of the False Claims Act. Under this act, private citizens can sue on behalf of the United States and share in any recovery.

“This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

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