Health Law Alert: Sibley Hospital and Johns Hopkins Health System Pay $5 Million to Settle Self-Disclosed Alleged Stark Law Violation

On April 17, 2023, the United States Department of Justice, on behalf of itself and the Office of the Inspector General for the United States Department of Health and Human Services, announced a settlement agreement with Sibley Hospital (“Sibley”) and the Johns Hopkins Health System related to potential violations of the federal physician self-referral prohibition, also known as the “Stark” law.  Pursuant to the settlement agreement, Sibley will pay the United States $5 million in return for a release from any civil monetary penalties it might otherwise owe related to its compensation agreement with 10 cardiologists who also referred patients to Sibley for various inpatient and outpatient services, some of which were billed to the Medicare program.

In October 2011, approximately 1 year after Sibley became part of the Johns Hopkins System, Sibley self-disclosed to federal authorities it had paid the cardiologists in excess of fair market value for reading and interpreting certain cardiovascular and peripheral vascular studies.  These possibly non-compliant compensation arrangements stretched from January 1, 2008 through April 19, 2011.  This matter was uncovered as part of the due diligence undertaken as part of the transaction that brought Sibley into the Johns Hopkins System (“Johns Hopkins”).

Under the settlement agreement, Sibley and Johns Hopkins were only released from civil monetary claims under common law theories of payment by mistake and unjust enrichment.  Among the claims the United States reserved the right to bring based on the disclosed arrangements include:

  • Liability pursuant to the federal False Claims Act;
  • Criminal liability, and
  • Liability of individuals related to the disclosed arrangements.

Sibley and Johns Hopkins also agreed to cooperate “fully and truthfully” with any investigation the United States may choose to pursue involving individuals and entities, other than themselves, that were involved in the disclosed arrangements.

In response to the announcement, the following statement was released on behalf of Sibley and Johns Hopkins:

“Johns Hopkins Medicine discovered and flagged a technical noncompliance with the Stark Act in 2011 as part of the onboarding evaluation for Sibley Memorial Hospital when they were becoming part of the Johns Hopkins Health System.  We immediately self-reported and have been working with the [DOJ] to bring closure to the matter in the 12 years since.”

This communication is for informational purposes and is not intended as legal advice.