Halifax Hospital in Daytona, Florida was the subject of a lawsuit brought by the Department of Justice after a whistleblower revealed inconsistencies with the payment of hospital physicians. The hospital was facing $1.1 billion in damages in addition to the $15 million already spent in legal fees. The hospital thus settled before trial for $85 million. A federal court ruled in November 2013 that Halifax was violating the federal Stark Law, which prohibits paying physicians for Medicare referrals. Halifax's improper compensation system involved paying six medical oncologists a portion of an incentive pool, equal to 15% of the "operating margin" for the oncology program. This pool from which the physicians were paid consisted of the billings for the medical services provided by the physicians, as well as the fees earned by the hospital for physicians' referrals to the hospital. The court ruled that compensation of an employee cannot take into account the "volume or value of the employee's Medicare referrals to the employer." Medical providers may continue to face this kind of resistance from the Stark Law and possibly be liable for large amounts in lawsuit damage awards.
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