Meridian Surgical Partners agreed this week to pay $5.12 million to settle a whistleblower lawsuit in which a former employee accused the company of engaging in Medicare fraud through kickbacks for physician referrals at a Florida ASC.

The settlement included $3.32 million in restitution to the U.S. government and $1.8 million in court costs to the plaintiff's attorneys, yet the Brentwood, Tenn.-based ASC management firm denied any liability. "While the allegations in the lawsuit were completely without merit, we chose to settle this action to avoid the financial costs and distractions that would have come with further legal proceedings," says Meridian CEO John Wilson in a statement.

Thomas Reed Simmons, the former business office manager at Meridian's Treasure Coast Surgery Center in Stuart, Fla., who filed the lawsuit in 2011, claimed the company had bought its majority interest in the center at an inflated price, then rewarded physicians for referrals with discounts on minority ownership stakes and higher annual distributions.

Since the referrals included many Medicare patients, Mr. Simmons argued, this scheme violated the federal Anti-Kickback Statute and False Claims Act while defrauding the government insurer out of an estimated $100 million.

During pre-trial motions, Meridian countered that its business practices were above board, and pointed out that Treasure Coast had terminated Mr. Simmons for misappropriation of funds.

The U.S. Department of Justice chose not to join Mr. Simmons's lawsuit — which was scheduled to go to trial in a Tennessee federal court later this month — as it occasionally does in Medicare fraud cases. "This settlement reaffirms that Relators who choose to pursue their claims after the Government has declined to intervene can achieve successful results," says attorney Michael D. Palmer, who represented Mr. Simmons.

David Bernard