FOR IMMEDIATE RELEASE

MONDAY, SEPTEMBER 26, 1994 HCF

T2 MEDICAL, INC., AGREES TO PAY $500,000

AND DISCONTINUE IMPROPER PRACTICES
IN SETTLEMENT WITH GOVERNMENT

ATLANTA, GEORGIA -- T2 Medical Inc., a Georgia-based home infusion company,has agreed to pay a $500,000 penalty and stop the
that contributed to its growth as part of a settlement of federal fraud charges.Kent B. Alexander, U.S. Attorney in Atlanta, and J
General of the U.S. Department of Health and Human Services, announced that
the Government has filed suit today in U.S. District Court together with a
consent decree that permanently enjoins T2, of Alpharetta, Georgia, from
engaging in improper financial relationships with referring physicians.

Under the consent judgment T2 must now radically restructure the way it
does business to sever the existing links between patient referrals and paymentsto physicians. In the settlement, in exchange for
to reimburse the government for the damages to Medicare and the costs of
investigation, and the requirement that T2 alter its business arrange-ments,
the government has agreed not to pursue further criminal, civil, or
administrative sanctions against T2 for certain business arrangements that
T2 had with physicians.
T2 is a major national provider of outpatient and home infusion therapy
and lithotripsy. Infusion therapy is the administration to a patient of
nutrients, antibiotics and other drugs and fluids, either intravenously or
through a feeding tube.
From 1989 through 1993, T2 entered into a variety of arrangements with
physicians who were in a position to refer their patients to infusion therapy
centers. In a typical scenario, T2 would help physician-investors establish
an infusion center, manage the center, then once a profitable referral pattern
was established between the physicians and the center, purchase the center in
exchange for shares of restricted T2 stock. By restricting the physicians
from selling their stock, T2 ensured that the physicians' economic fortunes
would be tied to T2's profits, which in turn relied on patient referrals.
These arrangements interjected a financial interest into physician's
referral decisions, which should have been based solely on the patient's best
interests. A physician who is receiving payments from a provider may consider,
consciously or unconsciously, his or her potential profit from referrals in
addition to the appropriate considerations of medical necessity, quality, cost,
and convenience to the patient.
The settlement agreement and proposed injunction will safeguard the
Medicare and Medicaid programs and their beneficiaries. T2's various business
arrangements enabled T2 to pay doctors who could refer patients to T2 and its
affiliates. Thus, T2 paid physicians remuneration in order to induce the
physicians to refer patients to T2 infusion centers.
The complaint filed by the government alleges that T2's arrangements
violated the Medicare and Medicaid anti-kickback statute, 42 U.S.C.i
1320a-7b(b). To the extent that the improper ownership structure of these
entities violated the anti-kickback statute, the claims submitted to Medicare
and Medicaid by T2 and some related entities are false and fraudulent within the
meaning of the False Claims Act, 31 U.S.C. 3729(a) and the Civil Money
Penalties Law, 42 U.S.C. 1320a-7a(1)(B). Where, as in this case, false or
fraudulent claims are being submitted to Medicare or Medicaid, the activity
which is leading to the submission of such claims may be enjoined pursuant to
42 U.S.C. 1320a-7a(k).
The settlement agreement and proposed injunction place a number of
restrictions on T2's future actions. Within six months, T2 must: except
under limited circumstances cease managing or providing other services to
entities which are owned by physicians; ensure that stock in T2 held by
physicians is not restricted in any way; offer physicians ownership in T2 only
on terms equally available to the public through trading on a national
exchange; and not participate in any partnership or other co-ownership
arrangement with physicians in any entity providing infusion therapy or one of
several other types of services. The proposed injunction immediately prohibits
infusion therapy centers managed by T2 from seeking or accepting Medicare or
Medicaid reimbursement. In addition, within one month, T2 will notify patients
at its facilities that their physicians may have an ownership interest in the
facility. T2 must establish that each patient has read and signed a form
acknowledging that the physician who referred the patient to T2 may have a
financial interest in the referral and that the patient has the freedom of
choice to obtain services elsewhere.
Alexander and Brown noted that the anti-kickback statute must be
aggressively used in cases such as this to curtail waste, fraud and abuse in
the Medicare and Medicaid programs. In the current health care system,
physicians and other health care providers often have an economic incentive to
order excessive services. The provision of unnecessary services drives up
ealth care costs and often places the patient at risk. Because of the nature
of most medical judgments by physicians, however, it is extremely difficult
for prosecutors to prove directly that particular referrals by physicians are
unnecessary or otherwise improper. The anti-kickback statute is designed to
combat overutilization, reduce costs, and safeguard patients' freedom of
choice, by reducing the ability of providers to try to induce physicians to
steer their patients to the highest bidder. Today's settlement agreement and
proposed injunction will help ensure that physicians' medical judgments are
not tainted by financial inducements from providers.
Alexander and Brown expressed their appreciation to assistant U.S.
Attorney Randy S. Chartash, who investigated the matter and negotiated the
settlement, and Special Agent Edward N. LeFaivre of the Office of Inspector
General, who investigated the case.
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94-548