A New Orleans Hospital, Touro Infirmary, will pay $1.75 million to settle allegations that it submitted false Medicare claims, according to the Department of Justice (DOJ).

The DOJ alleges Touro made unlawful payments of almost $150,000 annually, from 2000 to 2004, to psychiatrist Dr. Maria Carmen Palazzo to induce her to refer patients to the hospital. A New Orleans Hospital, Touro Infirmary, will pay $1.75 million to settle allegations that it submitted false Medicare claims, according to the Department of Justice (DOJ).

The DOJ alleges Touro made unlawful payments of almost $150,000 annually, from 2000 to 2004, to psychiatrist Dr. Maria Carmen Palazzo to induce her to refer patients to the hospital.

These kickbacks were allegedly disguised as a series of consultant and medical directorship contracts.

Federal law prohibits the payment of kickbacks or other inducements for referrals of patients participating in federal healthcare programs.

“Kickbacks are a blight on the health care system,” said Jeffrey S. Bucholtz, acting assistant attorney general for the DOJ’s civil division, according to the DOJ.

“They corrupt physicians’ medical judgment and lead to overutilization and misuse of taxpayer dollars. We will continue to be vigilant in our efforts to combat this pernicious practice,” he said.

Announcement of the settlement comes just after Palazzo was convicted of 39 counts of healthcare fraud, including 13 counts from her contractual relationship with Touro. “Dr. Palazzo heard … what health care providers who defraud Medicare are hearing from juries all over America; you will be held accountable for your greed,” said Mike Fields, special agent in charge for Health and Human Services Office of Inspector General (HHS-OIG), according to a DOJ press release. “HHS-OIG agents will continue to work closely with our state and federal law enforcement partners to protect the Medicare Trust Fund.”

Palazzo faces a possible maximum term of imprisonment of 390 years and fines of almost $10 million.