Mercy Medical Center in Cedar Rapids has agreed to a $14.8 million payment to the Department of Health and Human Services’ Office of Inspector General for a violation of the OIG’s Civil Monetary Penalties Law.
According to an OIG notification, Mercy Medical Center’s self-disclosed violation involved improperly providing financial benefits to an investment company — which holds an ownership stake in the hospital’s ambulatory surgery center — and to that company’s physician owners.
The alleged benefits took two forms, according to the OIG: management fees and expenses owed by the investment company to Mercy under a services agreement that went unpaid, and distributions made to the investment company and its owners that violated the surgery center’s own operating agreement.
Mercy Medical Center provided a statement this week regarding the situation and the $14.8 million payment:
“When Mercy uncovered an issue related to the fees and expenses for its ambulatory surgery center, we immediately conducted a thorough internal review and reported the issue to the Office of Inspector General (OIG). Mercy has since made the required changes to resolve the matter to ensure compliance with federal regulatory guidelines. The matter is now closed.
“The settlement with the OIG included a payment. The funds used for the settlement were not taken from our operating budget or donor contributions, meaning there is no impact on patient care, staffing, or day-to-day operations. The settlement is being paid from investments.
“Moving forward, we remain fully focused on delivering excellent, compassionate, high quality care to the communities we serve.”
