Mobile-based Infirmary Health System, along with two affiliated clinics and Diagnostic Physicians Group P.C. (DPG) agreed to pay the United States $24.5 million to resolve a lawsuit alleging that they violated the False Claims Act by paying or receiving financial inducements in connection with claims to the Medicare program, the Justice Department announced in a press release today.

The Justice Department agreed to prosecute the case last year after a whistleblower, former DPG cardiologist Dr. Christian Heesch, filed an initial complaint in 2011.

Alleging violations of the Starke Law and Anti-kickback statutes, the government claimed the defendants “knowingly submitted false and fraudulent claims and payment request certifications” by constructing false records, documents and statements, for more than $521 million in transactions, generating more than $18.6 million in fraudulent payments from government healthcare programs.

Filed under the False Claims Act, the defendants risked losing three times the amount the government believed it lost in the scheme, plus fines of up to $11,000 per claim.

In a statement following news of the settlement, Infirmary Health CEO Mark Nix said it “represents our strong desire to move past litigation about what has been a very complex issue and allow us to end this distraction so that we can focus on our mission and purpose as a community healthcare provider.”

Earlier this year, a federal judge dismissed portions of the case, but upheld counts of false claims and unjust enrichment. Nix said the the settlement “will allow us to avoid additional expenses of defense and the distractions associated with litigation.”

But the Justice Department heralded the settlement as a victory, claiming it “illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.”

Recoveries in False Claims Act cases since 2009 are more than $20 billion, according to the Justice Department, $14 billion of which was from cases involving healthcare fraud.

“Today’s settlement represents a single but significant step towards achieving integrity in the administration of public health programs in this region,” U.S. Attorney Kenyen Brown said. “Physicians, physician groups and other medical entities operating illegally within public health programs will be held accountable. I also commend whistleblowers like Dr. Christian Heesch, who helped bring this particular case to light.”

Also under the False Claims Act, whistleblowers are entitled to a portion of recovered money, in the event of a settlement or successful prosecution. A call to Heesch’s attorney was unsuccessful, but the statute calls for Heesch to receive between 15 percent and 25 percent of the settlement.

A Lagniappe report from late last year revealed that Heesch filed a similar claim against a previous employer, Verde Valley Medical Center in Cottonwood, Ariz., that was also subsequently settled. Heesch no longer works for DPG.

Nix further defended the Infirmary in the case, claiming “our intent has always been to comply with the very complex and extremely technical Stark Law. This complaint resulted from what has been a disagreement with the government over our interpretation of the law as written … It is very important to note that this suit focused solely on highly complicated contracts with physicians. Our patients received all of the medical services ordered by their physicians and those services were billed at the appropriate rates.”

The Justice Department noted that the Anti-Kickback Statute and the Stark Law “are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives.”

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal healthcare programs, including Medicare. The Stark Law forbids a hospital or clinic from billing Medicare for certain services referred by physicians who have a financial relationship with the entity.

As part of the settlement, the defendants have also agreed to enter into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), which obligates the defendants to undertake substantial internal compliance reforms and to submit its federal health care program claims to independent review for the next five years.

Infirmary Health is composed of three hospitals, three post-acute care facilities, three diagnostic centers, 22 medical clinics and other affiliates, serving an 11-county area along the Gulf Coast. Diagnostic & Medical Clinic includes 70 physicians and six locations throughout Mobile and Baldwin counties.