Vaughan Regional Medical Center (VRMC) and two emergency room physicians, Dr. Phillip Alan Hicks and Dr. Sai S. Namburu, will pay $1.45 million to resolve allegations that they violated the False Claims Act (FCA).

U.S. Attorney Richard W. Moore of the Southern District of Alabama announced details of the lawsuit on Thursday.

Hicks, a former Vaughan Chief of Staff and Director of Emergency Services, owned and operated Integrity Emergency Care, Inc.

The allegations resolved by this settlement arose from a whistleblower lawsuit filed under the False Claims Act by Dr. Samuel Clemmons.  He alleged residents who were not fully licensed were independently covering shifts in the VRMC Emergency Department.  Clemmons said in the report that he communicated with VRMC and LifePoint Health about the illegal use of these residents in the Vaughan Emergency Department, but no action was taken.  The whistleblower will receive $275,000 of the recovered funds.

“The significance of this case highlights the responsibilities of medical professionals and healthcare administrators to protect their patients from harm, and to prevent fraud against any federal health insurance program during the performance of their duties,” Moore said in a release. “The citizens of the Selma community are entitled to quality healthcare administered by fully licensed physicians, and actions taken to put patient care in jeopardy and to circumvent state and federal law will not be tolerated.’’

VRMC CEO David McCormack responded to the allegations Thursday in a written statement.

“Vaughan disputes the allegations in the lawsuit and the government’s investigation and believes that it has acted in compliance with applicable laws and regulations pertaining to its Emergency Department at all relevant times,” McCormack said. “The portion of the settlement paid by Vaughan stems from alleged conduct by a third-party staffing company whose contractual relationship with Vaughan ended in 2012. The decision to enter into the settlement agreement is based solely on Vaughan’s desire to avoid the cost and distraction of litigation and to allow Vaughan to focus on its mission of serving the healthcare needs of the residents of Selma and surrounding communities.”

Per the investigation by the U.S. Attorney office from mid-2009 until March 31, 2012, residents were recruited from the UAB-Selma Family Medicine Residency Program to independently treat patients in Vaughan’s ER Department outside the course and scope of their residency program.

The residents were not fully licensed and credentialed physicians, per the investigation, were paid $50 per hour cash along with licensed emergency room physicians got paid an extra $50 per hour to co-sign the residents’ charts.  This illegal moonlighting was perpetuated by falsifying medical records and submitting false claims to Medicare as if the services were provided by licensed physicians, according to Moore.

Derrick L. Jackson, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services, said it was unethical for patients to pay for unlicensed healthcare.

“Patients expect treatment by fully qualified medical professionals, and taxpayers should never be paying for healthcare provided fraudulently by an unlicensed physician–as alleged in this case,” Jackson said.

The investigation and litigation were conducted by the Office of Inspector General, Department of Health and Human Services, and the U.S. Attorney’s Office.  The FCA claims that only the allegations are settled, and there has been no determination of liability.