By: Jeff Cohen
A 2018 Department of Justice civil settlement involving a Florida interventional pain physician was a cliff hanger when it surfaced, especially vis a vis the issue of the so-called Company Model, where anesthesiologists and referring physicians jointly owned an anesthesia provider. The Daitch settlement involved interventional pain specialists who settled the case for $2.8 Million. There, the government claimed that a mass of urine drug tests weren’t reasonable or medically necessary. But the issue buried in the settlement call the issue of intertwined medical businesses and the Company Model into question.
The so-called Company Model involves the formation of a company that provides anesthesia services. It’s jointly owned by anesthesiologists and referring physicians. Theoretically, on a Monday, the anesthesiologists own the anesthesia practice and bill for all anesthesia services performed at a GI lab or ASC. On a Tuesday, however, the new company (jointly owned by the same anesthesiologists and the referring physicians) steps in and starts billing for the anesthesia services, thus indirectly sharing a part of the profits with the physicians who are generating the anesthesia referrals.
The Daitch facts are different. There, the interventional pain doctors owned the anesthesia provider entirely. And they had ownership in a surgery center where the pain procedures were performed and the anesthesia was provided (via their own anesthesia company). There was no discussion in the settlement report that there was a “before” entity or an “after” one. It was just the interventional doctors presumably doing (and billing for) the UDS services, the pain procedures and the anesthesia services, all through separate legal entities. What did the Justice Department think of that back in 2018 in the Daitch case? They didn’t like it one bit! In fact, the Feds characterized it as a kickback involving improper remuneration.
Healthcare lawyers can argue whether or not the enterprise established by the doctors had adequate support in federal and state law. There are interesting legal arguments to make on both sides of the table. And the Daitch settlement doesn’t involve any admission of wrongdoing, just payment of a huge fine. But the Feds’ view of business arrangements that are multi layered and intertwined as described in the Daitch case offer clear insight into the suspicion with which similar arrangements will be viewed…and possibly prosecuted.