U.S. Department of Justice Files Federal Complaint Against Erlanger Hospital in Chattanooga

Chattanooga, TN – News has emerged that Erlanger Hospital is now under judicial scrutiny after the U.S. Department of Justice (DOJ) filed a complaint against the healthcare institution. The DOJ alleges that Erlanger was complicit in knowingly charging Medicare for hospital services that were referred by its physicians from 2014 and at least up till 2021, which is in direct violation of federal law.

Claims by Former Erlanger Executives

This unfolds in light of a federal lawsuit that was filed back in April 2021 by two of Erlanger’s former executives, the hospital’s previous Chief Compliance Officer Alana Sullivan and ex-Chief Financial Officer Britt Tabor. The lawsuit was only recently unsealed this year. Sullivan and Tabor accused Erlanger of submitting false insurance claims via an illegal self-referral process to government medical insurance programs, including Medicare and Medicaid.

In Alleged Breach of the Stark Law

This alleged activity contravenes the federal anti-kickback statute, also known as the Stark Law. Sullivan and Tabor claimed in their lawsuit that the claims filed were deemed false since the claimants were not, in actuality, entitled to reimbursement.

Impact on Patients

The question arises: why does this matter to patients? According to the lawsuit, one doctor was reported to have the highest Contribution Margin amongst all Erlanger physicians, having generated over $9 million in inpatient and outpatient hospital service fees. The same doctor was allegedly granted a reward of more than $1 million for driving this high referral count.

What the Department of Justice Says

The DOJ complaint alleges that Erlanger was aware that physician compensation needed to be equal to fair market value to be eligible for an exception to the Stark Law prohibition. The DOJ claims that from 2014, Erlanger intentionally employed more physicians to secure their downstream revenue. In turn, they relaxed or eliminated physician compensation oversight and controls to attract and maintain physicians with valuable downstream revenue.

Erlanger’s Stand

Erlanger officials maintain their innocence. In response to our outreach, we have received an email from Erlanger stating that the physicians’ payments were based on amounts advised by external experts as being fair market value. They deny paying for referrals. Furthermore, they assert that a full-scale examination of facts will demonstrate a different narrative than what the government alleges, insisting that these accusations lack grounds. Erlanger vows to vigorously defend itself against this lawsuit.

Stay Updated

This issue will undoubtedly continue to develop in the coming weeks. To our readers, we implore you to stay connected as we pledge to deliver updates on this matter promptly.