For Immediate Release - January 20, 2015

South Shore Physician Hospital Organization to Pay $1.77 Million Over Alleged Kickbacks for Patient Referrals

State-Federal Agreement Alleges Defendants Operated Unlawful Grant Program; Massachusetts to Receive $620,000

BOSTON – The South Shore Physician Hospital Organization in South Weymouth has agreed to pay a total of $1.77 million to settle allegations of operating a recruitment grant program through which it paid kickbacks to its physician members in exchange for patient referrals, Attorney General Martha Coakley announced today. Massachusetts will receive a total of $620,000.

In a consent judgment, and related settlement agreement, entered today against South Shore Physician Hospital Organization, Inc. (SSPHO) and its member organizations, South Shore Hospital, Inc. and Physicians Organization of the South Shore, Inc. (POSS), AG Coakley alleges that SSPHO paid kickbacks in the form of cash grants via a recruitment grant program. Over the course of the program, from 2001 to 2010, SSPHO allegedly approved 103 separate grants to 33 different physician groups.

“Instead of giving patients lower cost options and flexibility in health care services, we allege these defendants looked to increase their referrals through an unlawful kickback operation,” AG Coakley said. “We are pleased to have worked with our partners in federal law enforcement to ensure that improper incentives do not undermine the integrity of our healthcare system.”

According to the settlement, the defendants voluntarily disclosed the operation of the recruitment grant program in 2012 to the AG’s Office, the United States Department of Justice and the Office of Inspector General for the U.S. Department of Health and Human Services. The defendants cooperated fully with the investigation.

As part of the recruitment grant program, SSPHO allegedly sent letters to grant recipients with specific terms, including requirements to refer patients to participating providers, which include the South Shore Hospital. Over time, SSPHO emphasized the importance of ensuring a continued increase in patient referrals.

As a result of this conduct, SSPHO and its member organizations allegedly caused participating providers who received referrals from grant recipients to submit false claims for payment to the Medicare Program and the Massachusetts Medicaid program (MassHealth), because those claims were made in violation of the Anti-Kickback statute, and violated the Massachusetts Consumer Protection Act. 

Under the terms of the settlement, SSPHO will pay a total of $1.775 million, including more than $620,000 to the Commonwealth, $310,625 of which will go directly to MassHealth.  The remainder will be paid to the federal government.

This matter was investigated by the Attorney General’s Office, along with the United States Department of Justice and the Office of Inspector General for the U.S. Department of Health and Human Services, and was handled by Assistant Attorneys General Courtney Aladro and Eric Gold of the Health Care Division and Angela Neal of the Medicaid Fraud Division.