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Prominent L.A. sports medicine clinic agrees to settle kickback allegations [Updated]

December 1, 2009 |  6:35 pm

A prominent Los Angeles-area sports medicine clinic has agreed to pay $3 million to the federal government to settle allegations that it received illegal kickbacks for referring patients to another healthcare provider, authorities said today.

The Kerlan-Jobe Orthopedic Clinic received kickbacks from HealthSouth Corp. in the form of stock-option grants, donations to the Kerlan-Jobe Foundation, loan forgiveness on an equipment lease and a high ownership interest in an ambulatory surgery center owned by the two healthcare firms, according to the U.S. attorney's office.

In exchange, Kerlan-Jobe referred patients to HealthSouth facilities for medical care, federal prosecutors said.

"Lining the pockets of physicians corrupts clinical judgment," George Cardona, acting U.S. attorney in Los Angeles, said in a statement. "Referrals should be based on quality of care for the patient, not the financial benefit for any physician or healthcare company."

Representatives for Kerlan-Jobe and HealthSouth could not be reached for comment.

[Updated at 5 p.m.: Dr. Ralph Gambardella, Kerlan-Jobe president, said the settlement allows the clinic to move forward. The settlement "enables our medical staff to continue to focus its full attention on providing high-quality patient care," he said in a statement. "We remain steadfast in our commitment to ethical and compliant business practices."]

Kerlan-Jobe has offices in Westchester, Beverly Hills, Pasadena and Anaheim. Doctors at the clinic have performed medical procedures on a number of professional athletes, including New England Patriots quarterback Tom Brady, who had reconstruction surgery last year on his left knee.

Kerlan-Jobe doctors have also served as team physicians or consultants to professional teams in Southern California, including the Lakers, Dodgers, Mighty Ducks and Galaxy.

The clinic was founded by Dr. Robert K. Kerlan and Dr. Frank W. Jobe in 1965 as the Southwestern Orthopaedic Medical Group. The name was changed to Kerlan-Jobe in 1985, according to the clinic's website. Kerlan was the team physician for the Dodgers when they moved to Los Angeles in 1958.

Under terms of the agreement, Kerlan-Jobe has two weeks to pay the settlement.

The agreement comes after a December 2007 settlement between the federal government and HealthSouth, which paid $14.7 million to resolve liability for alleged improper relationships with Kerlan-Jobe and a sports clinic in Alabama, according to the U.S. attorney's office.

-- Robert J. Lopez