In an amended complaint filed Aug. 7, the U.S. Department of Justice dismissed allegations physicians related to Infirmary Health Systems provided unnecessary or substandard care as a part of scheme to illegally profit from federal healthcare programs. Particularly, a claim doctors would routinely prescribe potentially harmful nuclear imaging tests without reasonable cause.

Still, the bulk of claims originally filed against the group under the False Claims Act in 2011 by Dr. Christian Heesch remain, primarily the allegation that Diagnostic Physicians Group “submitted, or caused to be submitted, millions of dollars in false claims to the Medicare program for designated health services, including clinical laboratory services and diagnostic imaging tests, that were referred by physicians with whom they had an improper financial relationship, in violation of the physician self-referral prohibition (commonly known as the ‘Stark Law’), and in violation of the Anti-Kickback Statute.”

At the same time, the government named names — at least 81 of them — allegedly connected to a $520 million federal healthcare fraud the government believes was perpetrated by DPG partners over a six-year period beginning in 2005.

The amended complaint, which still lists Infirmary Health Systems, DPG and two Infirmary-related clinics as defendants, describes the unlawful relationship as rooted in the practice of DPG physicians receiving a percentage of collections on items or services they referred to the clinics, IMC-Diagnostic and Medical Clinic, P.C. in Mobile and IMC-Northside in Saraland. Prosecutors believe the 81 doctors named in an appendix to the complaint may have shared around $20 million in bonuses as a result of the arrangement. 


The complaint suggests the defendants were complicit and knowledgeable of the violations by signing employment contracts and through Medicare reimbursement forms, which explicitly demand compliance with the Stark Law and Anti-Kickback Statute. Prosecutors also contend certain hospital administrators, including Infirmary Health CEO Mark Nix, DPG President Dr. F. Martin Lester, former Infirmary CEO E. Chandler Bramlett, Infirmary Executive Vice President of Physician Practices Barre Sanders and former Vice President of Clinic Operations for IMC and Mobile Infirmary Administrator Alan Whatley had specific knowledge of the scheme and “ignored warnings and discussions about Stark Law compliance.”

The government has demanded a jury trial in the case and is asking for three times the amount of the government’s loss, or more than $1.5 billion in compensation plus civil penalties and “further relief.” Although Heesch is among the dozens of doctors named in the government’s complaint, because he filed the original complaint under the False Claims Act, he stands to gain as much as 30 percent of any settlement or reward. A similar lawsuit Heesch filed against a previous employer was unsuccessful in persuading the government to intervene.

Nix said in a statement the system was “pleased” with the government’s decision not to pursue claims of inadequate care and indicated the defendants would defend themselves against the alleged Stark Law and Anti-Kickback Statute violations. 


“We are pleased to see that after the government spent 18 months reviewing our records, its focus is only on technical issues regarding reimbursement for services under a highly complex law and Dr. Heesch’s unsubstantiated charges are not included in the government’s Complaint,” Nix said. “We are prepared to defend the remaining claims asserted by the government and stand behind our position that the clinics compensated the clinic physicians in full accordance with the law and that the clinics and physicians acted in good faith and in the best interests of all patients. We are hopeful that as the legal process unfolds, the government and/or the courts will agree that the Clinic and its physicians acted in total compliance with all billing requirements.”