Healthcare whistleblower case regarding FMV can proceed

BVWireIssue #238-3
July 27, 2022

causation, fair market value (FMV), physician, anti-kickback statute, false claims act, healthcare, healthcare appraisal, but for causation, purchase price

The CFO of a healthcare provider blew the whistle on his former employer, alleging it overpaid for a surgery center in order to induce it to refer future business. Paying for future referrals is in violation of the federal anti-kickback statutes, which prohibit healthcare providers from exchanging remuneration in return for referrals of federal healthcare program business. The overpayment issue hinges on the acquisition being at fair market value. The CFO had done a “high level” valuation of $8 million to $10 million for the center, but the acquisition price ended up being $25 million. The defendants moved for summary judgment, but it was denied. The court ruled that the CFO’s valuation was enough to create a “triable issue regarding the fair market value of the [center]. Summary judgment is not appropriate on this issue.”

The case is Kuzma v. N. Ariz. Healthcare Corp., 2022 U.S. Dist. LEXIS 106969, and a case analysis and full opinion are available on the BVLaw platform.

Extra: The federal physician self-referral law (the Stark Law) incorporates a similar principle by prohibiting certain physician referrals to entities with which physicians have compensation arrangements. FMV is a key matter in this context also, and the rules recently changed. See the soon-to-be-released Complete Guide to Fair Market Value Under the Stark Regulations.

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