
Key Points:
● $31.5M DOJ Settlement: Fresno Community Hospital and Physicians Network Advantage paid to resolve allegations of violating the Anti-Kickback Statute and Stark Law through improper EHR-related incentives.
● Improper EHR Incentives: Allegations included early grants, delayed payments, and lavish hospitality to induce patient referrals—well outside permitted safe harbor and exception limits.
● Whistleblower Origin: The case began with a complaint from PNA’s former controller, who discovered questionable payments after a fire triggered an internal review.
● Compliance Risks: Even small deviations from federal EHR subsidy rules can lead to serious enforcement actions under the False Claims Act.
● Action Required: Providers should immediately review any EHR-related financial arrangements to ensure compliance with AKS and Stark Law requirements.
● Patriot Group Support: Patriot Group offers legal audits, contract reviews, and compliance support to help healthcare providers reduce legal exposure and protect their practice.
A recent $31.5 million settlement involving Fresno Community Hospital and Medical Center (CHS) and its partner Physicians Network Advantage (PNA) demonstrates the Department of Justice’s continued enforcement of the Anti-Kickback Statute (AKS) and Stark Law through the False Claims Act.
The allegations center on improper financial support and incentives offered to physician groups in connection with the use of CHS’s electronic health records (EHR) platform—support that allegedly went far beyond what is allowed under federal safe harbor and exception provisions.
Understanding the Allegations
CHS and PNA allegedly provided substantial financial subsidies and cost reductions for EHR adoption, including delayed upfront payments, grants issued before contracts were signed, and high-end hospitality offerings at PNA’s headquarters.
The DOJ claims these actions were intended to induce patient referrals for services reimbursed by federal health care programs, violating both the AKS and Stark Law. The original whistleblower, PNA’s former controller, initiated the complaint after discovering these practices while reviewing company expenses following a fire at the PNA headquarters.
While federal agencies encourage the adoption of EHR systems, providers must strictly follow the requirements of the AKS EHR safe harbor and Stark Law EHR exception. These include written agreements, clear cost-sharing arrangements, and prohibitions on any financial benefit linked to referral volume or value. Even seemingly minor deviations can draw scrutiny and trigger enforcement actions that carry serious financial and reputational consequences.
What Providers Should Do Now
This case serves as a timely warning for healthcare providers to review their financial arrangements with affiliated physician practices, especially when it comes to technology subsidies or incentives. Even well-intentioned EHR initiatives can lead to major enforcement actions if they are not properly structured and documented.
At Patriot Group, we help providers navigate complex regulatory frameworks and ensure their contracts, subsidies, and referral relationships are fully compliant. Our legal and compliance teams conduct thorough audits and assist with implementing safeguards that reduce risk exposure and support long-term practice integrity.
Questions? Contact the Patriot Group
If your practice is implementing or subsidizing EHR technology or wants to ensure existing relationships meet federal standards, contact Thomas J. Force, Esq., President and Founder of Patriot Group,at [email protected] or call (631) 870-4040. We’re here to help you stay compliant and protected.