Horizon Medical Center of Denton, which is owned by Corinth Investor Holdings, L.L.C. and operates a long-term acute care hospital with multiple Dallas County outpatient surgery centers, voluntarily self-disclosed its conduct to the Department of Justice. Specifically, Horizon self-disclosed that when submitting claims for payment to Medicare, it failed to include a “PN” modifier and location to identify services that were provided at its non-excepted off-campus outpatient facilities in Dallas, Richardson, and Coppell.
As part of its disclosure, Horizon provided an analysis from an independent third-party expert regarding the financial impact of omitting the “PN” modifier. It also disclosed the existence of Hospital Department Management Agreements at each facility by which Horizon contracted with certain third-party management companies that were affiliated with physicians performing surgery at the outpatient facilities, as well as Operating Lease Agreements by which Horizon contracted for the lease of certain equipment from companies directly or indirectly owned by a physician performing procedures at the surgery centers. These agreements created financial relationships between Horizon and the physician-owners.
“This office will continue to make sure that companies follow the rules of the road when submitting claims to federal healthcare programs,” said U.S. Attorney Leigha Simonton. “And while we will never condone unlawful conduct, we will continue to credit companies that voluntarily self-disclose misconduct prior to the government initiating an investigation.”
The Horizon settlement is the latest in a string of three civil settlements announced by the U.S. Attorney’s Office for the Northern District of Texas over the last year in which the settling party received credit for making a self-disclosure under the Department of Justice’s Guidelines for Taking Disclosure, Cooperation, and Remediation into Account in False Claims Act Matters.
In another case, Oliver Street Dermatology Management (d/b/a U.S. Dermatology Partners) paid the United States $8.9 million after self-disclosing that credible evidence suggested that former senior managers had offered to increase the purchase price of 11 dermatology practices acquired by the company in return for an agreement by the practices’ providers to refer services to Oliver Street affiliated entities, in possible violation of the Stark Law and the Anti-Kickback Statute.
And in a third case, Consolidated Nuclear Security, L.L.C., which operates the Pantex Nuclear Weapons Plant in Amarillo, paid $18.4 million after self-disclosing that certain production technicians at the plant fraudulently recorded on their timesheets hours they did not work.
In all three cases noted above, the self-reported conduct was unknown to the United States at the time of the self-disclosure and was specific as to the nature of the potentially problematic transactions, the personnel involved, and the potential financial impact on the government. All three settlements credited the companies for their self-disclosure and collaboration with government investigators. The claims resolved by the settlement agreements are allegations only, and there has been no determination of liability.
These civil settlements come as the U.S. Attorney’s Office for the Northern District of Texas announced its implementation of the recent USAO-wide voluntary self-disclosure (VSD) policy, which aims to provide transparency and predictability to companies and the defense bar concerning the benefits and potential outcomes in cases where companies voluntarily self-disclose misconduct, fully cooperate, and timely and appropriately remediate. The goal of the policy is to standardize how voluntary self-disclosures are defined and credited by U.S. Attorney’s Offices nationwide. It is also intended to incentivize companies to maintain effective compliance programs capable of identifying misconduct, to expeditiously and voluntarily disclose and remediate misconduct, and to cooperate fully with the government in investigations.
The Horizon resolution is the result of a coordinated effort between the U.S. Attorney’s Office for the Northern District of Texas and the U.S. Department of Health & Human Services’ Office of Inspector General. This matter was handled by Assistant U.S. Attorneys Ken Coffin and Brian Stoltz.
