In April, a Florida federal district court found in the hospital’s favor after years of litigation in Bingham v. Baycare Health System. The ruling came after two years of litigation against the nonprofit hospital. There are a few concepts hospitals can take away from this case including: (1) even in seemingly mundane matters like physician parking, you should be vigilant about compliance, (2) be careful in communications, anyone can be a whistleblower, and (3) while the hospital’s position was validated in this case, the outcome may have been different had the hospital had a policy of giving favorable parking as a reward to high-referring physicians.
Baycare is a nonprofit hospital in Florida, and starting in 2005, worked with its property company to develop and build a medical office buildings (MOBs) that included common areas, walkways, and garages. It eventually entered into a lease agreement with an independent entity, St. Pete MOB, and as a part of that lease, gave a parking easement for 240 parking spots. The independent entity then entered into lease agreements with physician practices. Baycare also instituted a valet parking program at the hospital. Further, during the years there was an issue of the mis-classification of the MOB as tax exempt. These issues came together as the basis for allegations against the hospital by a whistleblower.
In 2014, Thomas Bingham filed suit against Baycare alleging violations of Stark, the Anti-kickback Statute (AKS) and the False Claims Act (FCA). Bingham was a Nashville real estate appraiser with no relationship to the hospital. He alleged that through direct and indirect relationships, the hospital had inappropriately provided free parking, rent concessions in the form of tax benefits and valet parking services to referring physicians.
In 2015, the matter came before the trial court on the hospital’s motion to dismiss the case. Among Bingham’s arguments was that the free parking arrangement varied based on the volume or value of referrals, because larger practices with more patients would use more parking than the smaller ones. The trial court, without extensive analysis, denied the hospital’s motion to dismiss the case, agreeing that the claim should proceed under Stark and the AKS theories. Bingham v. Baycare Health System, 2015 WL 4878456 (M.D. Florida 8/14/2015).
Ultimately, the matter came up on cross motions for summary judgment, where Bingham asked the court to find as a matter of law that there was a violation of the law and the hospital asked the court to find that there was not a violation of the law. The court did a careful analysis of the Stark, AKS and FCA issues and made a number of findings, all in the hospital’s favor. On Bingham’s claim that the hospital gave the physicians free parking and tax breaks to induce referrals, the court found that the lease agreement between the hospital and St. Pete’s MOB was not a direct compensation agreement between the hospital and the physicians. Rather, that the physicians received the parking benefit from their employers who were the actual tenants at the MOB and further that the employers received the benefit from the MOB, not from the hospital. The court also found that there was no evidence that (1) the tax benefit was actually passed on to the physicians or (2) that the physicians ever used the parking service. Additionally, the court determined that there was not a prohibited indirect compensation arrangement because the physicians compensation did not vary with the volume or value of referrals, but rather their compensation from their employers were in the form of base salaries with an appropriately structured bonus. Finally, the court reasoned that the parking services were consistent with fair market value and were included as a part of the fair market value for the hospital’s leasing the MOB space, even if it wasn’t listed as a line item. The hospital argued, and the court agreed, that parking and maintenance were included as a part of the benefits provided to any tenant of the MOB as a part of the building’s features.
Although the issues of MOB leases and physician parking seem rather mundane, this case demonstrates how an unrelated whistleblower from another state caused years of litigation for a hospital over an issue that many would regard as trivial. Hospitals must be ever vigilant about both compliance and handling complaints when they arise, remembering that anyone can be a whistleblower.
Written by: Emily B. Grey