Cleveland Clinic Will Pay Over $21 Million to Resolve False Claims Act and Qui Tam Allegations

Published on July 6, 2022

Akron, OH – Akron General Health System (AGHS), part of the Cleveland Clinic, paid $21.25 million to resolve a qui tam whistleblower case captioned United States ex rel. Ethical Solutions and Beverly Brouse. v. Akron General Health System, Inc. et al., No. 5:15-cv-2720 (N.D. Ohio). In 2015, Attorneys Warner Mendenhall and Thomas Connors of Mendenhall Law Group filed a lawsuit for Beverly Brouse Akron General’s Director of Internal Audit under the False Claims Act. Brouse had been terminated from her position after the Cleveland Clinic acquired Akron General.  In May 2021, AGHS, the U.S. Government, and relators agreed to the settlement revealed this week.

The False Claims Act allows whistleblowers to sue to recover federal funds paid based on false claims. In exchange for the whistleblower’s cooperation with a federal investigation, the whistleblower gets a percentage of any recovery. 

The Anti-Kickback Statute and Physician Self-Referral Law prohibit Medicare-participant hospitals from paying doctors above-market rates in exchange for patient-referrals. Brouse alleged Akron General Health System paid doctors above market-rate in exchange for referring patients to the hospital. See United States Department of Justice Press Release No. 21-624. When the lawsuit was filed in 2015, it alleged “for at least the past 5 years, [AGHS] engaged in a scheme to pay improper compensation to physicians to induce them illegally to refer patients, including Medicare, Medicare Advantage and Medicaid patients, to [AGHS] for inpatient and ancillary services.” This improper compensation included “hefty annual salaries far over the fair market value of the services rendered.”

In response to the settlement, Brouse stated “I worked in the AGHS compliance and audit departments from 2002 to December 2015. In 2013, I was appointed Director of lnternal Audit, a position I held until December 2015, when AGHS terminated me. As Director of Internal Audit, I reported to the Compliance and Internal Audit Committee of AGHS’s Board. I raised in good faith issues regarding arrangements that AGHS had with certain physician groups. Those arrangements are discussed in the settlement agreement reached with the Department of Justice. I also had concerns about my termination from AGHS. I am pleased that DOJ, Akron General and I were able to resolve these matters.”

“After six years, it is gratifying to achieve such a positive result for our client and the taxpayers,” said Warner Mendenhall. “We especially appreciate our client for her courage and work with investigators to recover federal funds. Beyond the great outcome, this type of work brings accountability to healthcare system and protects patients from fraudulent practices by their providers.  Medical decisions should be about the patient and not financial arrangements.” 

The lawsuit is captioned United States ex rel. Brouse et al. v. Akron General Health System, Inc. et al., No. 5:15-cv-2729 (N.D. Ohio).


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