SIOUX FALLS, S.D. – Sanford Health, one of the nation’s largest health systems, has agreed to pay more than $20 million to resolve kickback allegations stemming from a whistleblower lawsuit filed by two Sanford doctors, the U.S. Department of Justice said Monday.
The lawsuit alleged that the health system, based in Sioux Falls, knowingly submitted false claims to federal health care programs for medically unnecessary spinal surgeries, the DOJ said.
“Kickbacks can compromise a physician’s medical judgment, result in unnecessary procedures and increase health care costs for everyone,” said Assistant Attorney General Jody Hunt of the Justice Department’s Civil Division.
Sanford Health CEO Matt Hocks said the health system denies any liability or wrongdoing. Hocks said Sanford settled because the $20.25 million amount is “far less than the unnecessary costs and operational disruption that would have persisted for multiple years.”
Sanford received warnings from the neurosurgeon’s colleagues that he was receiving kickbacks for his use of implantable devices distributed by his physician-owned distributorship, the DOJ said. They repeatedly warned that the neurosurgeon was performing medically unnecessary procedures involving devices “in which he had a substantial financial interest,” the department said.
Drs. Carl Dustin Bechtold and Bryan Wellman, who filed the 2016 lawsuit, will receive $3.4 million of the settlement money under the False Claims Act, which allows whistleblowers to bring lawsuits on behalf of the government and share in any recovery.