Detroit-based non-profit healthcare service provider Detroit Medical Center (DMC) has agreed to pay the federal government $30 million penalty to settle allegations that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute by involving in improper financial relationships with referring physicians, according to a statement from the U.S. Department of Justice (DOJ).

According to the DOJ, DMC has violated several federal laws which restrict the financial relationships that hospitals may have with physicians who refer patients to them.

Most of the relationships at issue in this matter involved office lease agreements and independent contractor relationships that were either inconsistent with fair market value or not memorialized in writing, the DOJ said.

Improper financial relationships between healthcare providers and their referral sources can corrupt a physician's judgment about the patient's true healthcare needs, said Tony West, Assistant Attorney General for the Department's Civil Division.

In addition to yielding a substantial recovery for taxpayers, this settlement should deter similar conduct in the future and help make healthcare more affordable for patients, West said.

The DOJ said DMC has voluntarily disclosed that it provided tickets to physicians to sporting events, entertainment and charity dinners from 2004 to 2010.

The disclosure was made by DMC after it agreed to be taken over by Vanguard Health Systems Inc., a company headquartered in Nashville, Tenn., for $365 million. Vanguard also signed the settlement.

Vanguard said it would transform DMC into a for-profit entity. As per the acquisition agreement, Vanguard will invest $850 million in new and existing DMC facilities over the next five years.

We applaud the hospital leadership's decision to come forward voluntarily to disclose these issues to the government, U.S. Attorney Barbara McQuade said.