Two dozen companies recently settled accusations by the federal government that they paid kickbacks in return for referrals. Two of those companies have ties to an Overland Park radiation oncology clinic.
SL Kansas City Leasing, LLC and Sightline Kansas City Holdings, LLC were among the defendants that agreed to pay up to $11.5 million to settle allegations they violated the Anti-Kickback Statute. The companies sublease space to Advanced Radiation Center of Kansas City at 6427 W. 119th St.
SL Kansas City Leasing and Sightline Kansas City Holdings are subsidiaries of SightLine Health, LLC in Houston, which, through similar entities, operates radiation centers in several states and agreed to the settlement disclosed last week.
A person who answered the phone at Advanced Radiation Center and told KCUR he runs the center said he was unfamiliar with the settlement. He referred inquiries to Integrated Oncology Network Holdings (ION), a California-based company that acquired Sightline Health in 2011.
ION CEO Jeffrey Goffman, in an email to KCUR, said that ION had not agreed to any wrongdoing in the settlement and that the allegations concerned Sightline’s management team before ION acquired the company.
“We have a full indemnification from the SightLine sellers and actually filed a lawsuit against them this week in Delaware court to recoup the settlement amount and legal fees,” Goffman said.
The government intervened in the case after it was filed by a whistleblower in 2016. According to the recently unsealed complaint, Sightline approached physicians in cities where it established radiation clinics and enticed them to invest in ventures that leased space to the clinics. The physicians, who had to invest or guarantee around $100,000 each, in turn were promised a cut of the profits, giving them a financial incentive to refer patients to the clinics.
According to the government complaint, the investing physicians owned 80 percent of the leasing companies and received 80 percent of the profits. Sightline owned the remaining 20 percent and took 20 percent of the profits. Sightline also charged a management fee of up to $30,000 a month.
The clinics administer intensity-modulated radiation therapy, one of the most expensive methods of treating prostate cancer. A course of treatment typically costs $30,000.
Records filed with the Kansas Secretary of State’s office show Advanced Radiation Center of Kansas City was incorporated as a medical practice in 2013 by Texas resident T.J. Farnsworth, the former CEO of Sightline Health. According to the government’s complaint, he was believed to be a 30 percent owner of Sightline Health as recently as December 2015.
The records showed the clinic’s medical licensee was listed as Dr. Randall A. Scharlach, a radiation oncologist who practices in Woodland Hills, California. Scharlach did not return a call seeking comment. Goffman said Scharlach is no longer affiliated with Advanced Radiation Center.
Farnsworth and eight other individuals who were also sued by the government did not agree to settle. In a separate court document, the government said its investigation of them is continuing. The individual defendants include the urologists who invested in SL North Texas Leasing LLC, which the government in its complaint cited as an example of the kickback arrangement.
Dan Margolies is a senior reporter and editor for KCUR. You can reach him on Twitter @DanMargolies.