Hospital Group In McCallan Texas Agrees To Pay $27.5 Million To Settle Qui Tam Action Alleging Unlawful Kickback Payments To Doctors

On October 30, 2009, the U.S. Department of Justice announced that it entered into a settlement agreement with McAllen Hospitals L.P. d/b/a South Texas Health System, a subsidiary of Universal Health Services, Inc., in which McAllen Hospitals agreed to pay $27.5 million to resolve a qui tam lawsuit alleging that the company paid unlawful kickbacks to numerous doctors in order to induce them to refer patients to the company’s hospitals, in violation of the rules governing Medicare and Medicaid.  The payments were allegedly disguised via sham contracts, including medical directorships and lease agreements.  The lawsuit was brought on behalf of the Government by whistleblower Bruce Moilan, a former employee of McAllen Hospitals.  Mr. Moilan’s share of the settlement was $5.5 million, equivalent to 20% of the total settlement proceeds.

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