SYRACUSE, N.Y. (Legal Newsline) - New York Attorney General Eric Schneiderman announced a settlement on Wednesday with Cayuga Medical Center for allegedly violating the Stark Act.

The Stark Act prohibits physicians from referring patients to a hospital if the physician has a relationship financially with the hospital unless there is an applicable exception. The law also prohibits a hospital from billing Medicaid for a referral that is prohibited.

"Today's settlement sheds light on the practice of questionable recruitment agreements with physicians." Schneiderman said. "Cayuga Medical Center's actions were a violation of the Stark Act which is intended to ensure that physicians' decisions not be influenced by any financial relationship they may have with a hospital."

The settlement totals $3,149,751 in both Medicaid and Medicare damages. The total recovery related to Medicaid is $710,508, of which New York will receive $426,305. CMC itself disclosed that certain physician recruitment agreements within the facility did not comply with the Stark Act.

Daniel Jorgenson, a plastic surgeon with admitting privileges at Cayuga Medical Center, filed the whistleblower lawsuit in 2007. Jorgenson outlined two questionable recruitment agreements with the facility that violated the Stark law. As a whistleblower, Jorgenson will receive 18 percent of the proceeds generated by the settlement.

Schneiderman thanked the U.S. attorney's office for the Northern District of New York, Jorgenson and Cayuga Medical Center for their cooperation in this case.