Dept. of Justice looks to join investigation into alleged Methodist kickback scheme

MEMPHIS, Tenn. — The United States Department of Justice announced Friday that it’s looking to join an investigation into Methodist Le Bonheur Healthcare.

The investigation comes after a whistleblower’s lawsuit that claims Methodist and the West Cancer Clinic were involved in a kickback scheme with Methodist allegedly making payments to the West Clinic to entice doctors to send patients to their hospitals.

That lawsuit resulted in West Cancer Clinic agreeing to a settlement last year, but now the Department of Justice wants to bring them back into the fold and has asked a federal judge to allow them to join in the prosecution of the case.

University of Memphis law professor Steve Mulroy broke down why such allegations would be illegal.

“So, if you’re going to be referring patients to a particular hospital, for example, you have to do it based on just your own good faith decision that they were the right person to refer. You can’t get some money under the table for it,” Mulroy said.

In all, the lawsuit claims that Methodist paid out $270 million to the West Cancer Clinic physicians since 2012, disguising some of those payments as “management fees”.

“What the government is saying is that the kickback arrangements that are alleged violate the law and as a result, they are going to seek money damages so they are going to seek the amount of supposed illegal damages times three called triple damages,” Mulroy said.

FOX13 reached out to Methodist Le Bonheur Healthcare to hear their side and see how they felt about the U.S. Department of Justice announcing their desire to get involved.

They said they’re disappointed in the federal government’s decision to intervene and that nothing has changed about the case since the Department of Justice’s original decision not to intervene in Sept. of 2019

“The allegations in the suit are without merit and we will vigorously defend against them,” a statement from Methodist read. “The suit amounts to after-the-fact second guessing of the level of payments MLH made to West Clinic for the services provided by its physicians. This compensation structure was designed by respected outside experts who determined it reflected fair market value for such services, and our payments for those services were appropriate.”

Methodist Le Bonheur will now have a chance to respond to the new motion. If they object, Mulroy said the court will make a ruling to determine if the federal government can intervene.