Two former high-ranking employees have filed a False Claims Act complaint against Chattanooga, Tenn.-based Erlanger Health System.
The complaint, filed in 2021 by former CFO J. Britton (Britt) Tabor and former Chief Compliance Officer Alana Sullivan, was made public this month, according to court documents accessed by Becker's.
Former executives, who say they were let go in 2019 and 2021, respectively, allege that Erlanger offered, paid and provided unlawful kickbacks, excessive pay and other illegal financial incentives to employed and non-employed physicians who refer patients to the health system, in violation of the Anti-Kickback Statute and Stark Law.
Erlanger officials disputed the claims.
"Erlanger paid physicians based on amounts that outside experts advised was fair market value. Erlanger did not pay for referrals," the officials said in a statement shared with Becker's. "A complete picture of the facts will demonstrate that the allegations lack merit and tell a very different story than what these former employees now claim. Erlanger will vigorously defend this lawsuit."
According to the complaint, Erlanger knowingly submitted false claims for reimbursement to Medicare, federal Medicaid, state Medicare and other government payers for healthcare services referred by the physicians to whom the health system was paying the illegal kickbacks, excessive compensation and/or other illegal financial incentives. The complaint is based on allegations brought under the qui tam, or whistleblower provision, of the False Claims Act.
"Those claims were false because they were not eligible for reimbursement," the complaint said. "Moreover, when submitting those false claims for reimbursement, Erlanger falsely, expressly certified to those payers that it was in compliance with the Stark Law and the AKS."
An Erlanger spokesperson told Becker's that the Justice Department has intervened as to the Stark Law claims only, but declined to intervene as to all "other claims." The states of North Carolina and Tennessee, where Erlanger operates, have declined to intervene on any claims.
The former Erlanger executives have until May 31 to decide if they will pursue "other claims" parallel with the Justice Department claim, the spokesperson said.
Marlan Wilbanks, an attorney representing Ms. Sullivan and Mr. Tabor, told the Chattanooga Times Free Press that the Justice Department is allegedly planning to file its own complaint against Erlanger. Lia Bantavani, a spokesperson for the Justice Department, did not respond to the newspaper by deadline to confirm or deny the department's involvement.
Mr. Wilbanks told the Chattanooga Times Free Press that he expects Erlanger to owe upward of $70 million if the complaint is successful.