Coram Unit to Pay $500,000, Cut Its Doctor Partnerships

In what could be an important precedent for the federal government in its efforts to enforce anti-kickback laws in the medical industry, a unit of a Newport Beach home infusion company said Monday that it has agreed to pay $500,000 to end a federal probe of its financial relations with doctors.

To settle fraud charges brought by the U.S. Department of Health and Human Services, T2 Medical Inc., an Atlanta-based unit of Coram Healthcare Corp. of Newport Beach that supplies intravenous drugs and nutrients to patients in their homes, agreed to change many of its business practices.

Without admitting wrongdoing, T2 Medical agreed to stop managing physician-owned entities except on a limited basis; stop offering doctors preferred deals on company stock, and avoid participating in any partnership with doctors in any business providing home infusion.

The probe focused on whether T2 Medical, which operates in more than 100 cities and 38 states, was in effect paying doctors for referring patients to T2 Medical centers in which they had a financial stake. Payment for patient referrals is illegal for companies and individuals receiving reimbursements under the federal Medicaid and Medicare programs.

The T2 settlement “is far-reaching and precedent setting,” said Ross Stromberg, an attorney who specializes in health care cases at the law firm Jones Day Reavis & Pogue in Los Angeles. “The federal government is attempting to give notice to the field to be extremely cautious in business arrangements with physicians. It will have a chilling effect on what companies are doing.”

James M. Sweeney, Coram’s chairman and chief executive, said Monday that T2 Medical has already stopped forming the types of partnerships outlined in the agreement with the federal agency and that Coram will have repurchased all doctor stakes in the centers by December.