A federal district court in Ohio has refused to dismiss two whistleblower lawsuits accusing TriHealth of violating the Stark law, Anti‑Kickback Statute and False Claims Act, according to July 28 court documents accessed by Becker’s
What happened?
- In one of the lawsuits — Murphy v. TriHealth — whistleblowers allege that TriHealth paid physicians well above their actual productivity, not for services performed, but because of the lucrative downstream referrals they generated. Although this created operational losses for the physician group, TriHealth and its hospitals compensated for them and profited, leading the District Court Judge Douglas Cole to describe the arrangement as “managing up the return, rather than managing down the loss.”
- The second suit — United States ex rel. Shahbabian v. TriHealth — involves Set Shahbabian, MD, whose neurosurgery practice was acquired by TriHealth. Dr. Shahbabian claims he was ousted and his patients were redirected to another high‑referral practice under alleged coercion and threats of reporting to medical boards.
- According to a blog post from Warner Norcross + Judd, the court ruled that both whistleblowers had stated plausible false claims grounded in AKS and Stark violations. TriHealth could not invoke any applicable safe harbor or exception, including the employment exception under AKS. Additionally, the court rejected TriHealth’s intra‑corporate conspiracy defense, reasoning that physicians who coerced referrals acted beyond the scope of their employment.
- The blog post added that, importantly, Mr. Cole certified a key constitutional issue involving the FCA’s qui tam provisions, sending that matter to the Sixth Circuit for interlocutory review.
“The US Attorney’s Office determined more than a year ago, after reviewing thousands of documents over several years, that it would not join the complaints against TriHealth, supporting our contention that the claims are patently false and without merit. The recent court ruling was merely over a procedural matter” a spokesperson said in a statement shared with Becker’s. “We had hoped the Government’s decision not to intervene in the lawsuit would have brought this matter to an end, but unfortunately it did not. TriHealth has robust practices and procedures to make sure compensation paid to physicians complies with all laws and regulations, and we will continue to vigorously defend against the unfounded allegations.”
