Relocation incentives get California hospital CEO indicted

Experts say accusations against the leader of a Tenet subsidiary should cause all parties to ensure the legality of their physician recruitment agreements.

By Katherine Vogt, AMNews staff. June 30, 2003.

The indictment of a hospital chief accused of violating anti-kickback laws in connection with physician relocation arrangements may make hospitals reluctant to offer incentive packages to potential physician recruits, some attorneys say.

The accusations against Barry Weinbaum, CEO of Alvarado Hospital Medical Center in San Diego, shed light on an area of law where physicians and hospitals can get into trouble, experts say. His case may provide a good opportunity to review how physician relocation incentives can be conducted legally -- and what provisions might raise a red flag.

"There may be other facts here, but I think this case causes health care lawyers to wonder whether a not-unusual recruitment agreement will now be called into question," said Jeremy Miller, a Los Angeles-based health attorney. "And one concern for physicians may be that some may have trouble getting jobs in certain places where the group or hospital would like to hire them, but they are concerned about recruitment arrangements."

The U.S. Attorney's office in San Diego June 6 said a federal grand jury had indicted Weinbaum on charges of making illegal payments to doctors to induce the referral of patients. The indictment alleges that Weinbaum paid more than $10 million to physicians to relocate to the hospital's service area, with much of the money going to the established medical practices the physicians joined. The indictment also claims that those practices were either targeted for increased referrals by Alvarado or were loyal referrers of patients to the hospital.