In The News

Los Angeles Hospital Agrees to Pay $42 Million to Settle Alleged False Claims Act Violations

Healthcare providers entering into improper relationships with physicians is a common theme in the government’s ongoing crackdown on Medicare and Medicaid fraud and abuse. This was demonstrated again last week when the Justice Department announced that two healthcare providers – PAMC Ltd., and Pacific Alliance Medical Center, Inc. – had agreed to pay $42 million in order to settle allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians. The two entities own and operate Pacific Alliance Medical Center. Of the agreed upon settlement amount, $31.9 million will be paid to the government while the remaining $10 million will be paid to the State of California.

 

The settlement resolves allegations that were brought forward by a whistleblower who alleged that the defendants had submitted false claims to Medicare and MediCal Programs for services rendered to patients with whom they had improper relationships. Specifically, the whistleblower lawsuits alleged that the defendants paid above-market rates to rent office space within the physicians’ practices. Moreover, the lawsuit alleged that these marketing arrangements unduly benefited the physicians and their practices. These actions are alleged to have violated not only the False Claims Act but the Anti-Kickback Statute (42 U.S.C. § 1320a-7b.) and the Stark Law (42 U.S. Code § 1395nn). Both laws restrict the knowing and willful payment of “remunerations” to induce or reward patient referrals.

 

“Federal law prohibits improper financial relationships between hospitals that receive federal health care funds and medical professionals – this is to protect the doctor-patient relationship and to ensure the quality of care provided,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “Patients deserve to know their doctors are making health care decisions based solely on medical need and not for any potential financial benefit.”

“This settlement is a warning to health care companies that think they can boost their profits by entering into improper financial arrangements with referring physicians,” said Special Agent in Charge Christian J. Schrank of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Working with our law enforcement partners, we will continue to crack down on such deals, which work to undermine impartial medical judgement, drive up health care costs, and corrode the public’s trust in the health care system.”  The whistleblower in this case was Paul Chan who worked for one of the defendants as a manager. Mr. Chan filed his case under the qui tam provisions of the False Claims Act. Under these provisions, individuals are able to sue on behalf of the United States and share in any subsequent recovery. Mr. Chan is expected to receive approximately $9.2 million.

 


Genesis Healthcare Inc. Agrees to Pay $53.6 Million Settlement to Resolve False Claims Act Violations

The government seems even more determined than ever to crack down on illegal billing and to make those who have done so pay for their alleged misdeeds. Proof of this came last week when the Department of Justice announced that Genesis Healthcare Inc. has agreed to pay more than $53 million – including interest – to settle lawsuits alleging that it and several other companies violated the False Claims Act. The government alleges that Genesis violated the False Claims Act by submitting false claims for medically unnecessary therapy and hospice services and by providing grossly substandard nursing care. Genesis – which is located in Kennett Square, Pennsylvania – owns and operates skilled nursing facilities, assisted/senior living facilities and a rehabilitation therapy business. “We will continue to hold health care providers accountable if they bill for unnecessary or substandard services or treatment,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Today’s settlement demonstrates our unwavering commitment to protect federal health care programs against unscrupulous providers.”

 

The settlement resolves four sets of allegations in all.

  • In the first allegation, the government maintains that from April 2010 through March 2013, Skilled Health Group Inc. (SKG), Skilled Healthcare LLC (Skilled LLC), and Creekside Hospice II LLC, knowingly submitted false claims to Medicare for services they provided at Creekside Hospice. Specifically, the facilities are alleged to have billed hospice services for patients who were not terminally ill and that they billed inappropriately for physician evaluation services.
  • Secondly, the settlement resolves allegations that from January 1, 2005 through December 31, 2013, SKG, Skilled LLC and Hallmark Rehab GP LLC submitted false claims to Medicare, TRICARE and Medicaid for medically unnecessary services that they billed for more therapy minutes than their patients received. The facilities are also alleged to have fraudulently assigned patients a higher Resource Utilization Group (RUG) level than necessary. RUGs are mutually exclusive categories that reflect levels of resource need in long-term care settings. Medicare reimburses SNF’s based on these metrics.
  • In the third allegation, the government maintains that from January 1, 2008 to September 27, 2013, Sun Healthcare Group, Inc., SunDance Rehabilitation Agency and SunDance Rehabilitation submitted false claims to Medicare Part B by billing for medically unnecessary services and for services that were carried out by unskilled persons.
  • In the final allegation, the Justice Department maintains that between September 1, 2003 and January 3, 2010 Skilled LLC submitted false claims to Medicare and Medi-Cal at its nursing homes for services that were substandard. Specifically, the settlement resolves allegations that these facilities failed to provide sufficient nurse staffing to meet the needs of residents. This in turn violates the government’s standard requirements for these nursing homes, SNF, etc.

“Safeguarding federal health care programs and patients is a priority,” said Acting U.S. Attorney Steven W. Myhre for the District of Nevada. “Today’s settlement is an example of the U.S. Attorney’s Office’s commitment to holding medical providers accountable for fraudulent billing of medically unnecessary treatments and services. We are committed to protecting federal health care programs, including Medicare, TRICARE, and Medicaid, which are funded by taxpayer dollars.” The settlement resolves allegations that were brought about by lawsuits filed under the qui tam, or whistleblower, provisions the False Claims Act by several former employees of companies acquired by Genesis. The qui tam provisions of the False Claims Act permit individuals to sue on behalf of the federal government in cases alleging false claims and to recover a portion of any subsequent settlement. The whistleblowers in this case are scheduled to receive a combined $9.67 million.


Defense Contractor Pays $95 Million to Resolve Allegations of Criminal, Civil Activities Related to Food Service Contracts

Foreign companies that do business with the United Sates are not beyond the reach of its laws when it comes to waste and fraud. The Department of Justice proved this to be the case when last month they announced that Agility Public Warehousing Co. KSC (Agility) – a Kuwaiti company – had agreed to resolve criminal, civil and administrative cases against it regarding their food contracts with the Department of Defense. The company’s contract covered food service for U.S. Troops from 2003 through 2010. As a part of a global resolution, Agility has agreed to pay $95 million to resolve civil fraud claims, to forgo $249 million in claims to DOD and to plead guilty to theft of government funds. For its part, the DOD’s Defense Logistics Agency (DLA) will release a claim of $27.9 million against Agility and lift its suspension of the company. (Agility had been suspended from entering into federal contracts for a period of seven years.)

“This settlement marks the conclusion of a lengthy investigation that demonstrates the Defense Criminal Investigative Service’s (DCIS) commitment to ensuring that tax dollars spent to support Department of Defense programs and missions are protected from fraud and abuse throughout the procurement process, but especially during overseas combat operations which are the most vulnerable,” said Special Agent in Charge John F. Khin of, DCIS-Southeast Field Office. “This extremely complex investigation required DCIS agents and our partners to tenaciously sort through and piece together an unprecedented volume of information and documents, and persevere through many years of exhaustive work, to bring this case to a resolution.”

The civil complaint alleges that Agility and TSC knowingly overcharged the DOD for locally available fruits and vegetables despite agreeing that they would pay 10 percent less than the amount billed. The United States also alleged that Agility failed to disclose rebate and discounts it obtained from US suppliers as it was contractually obligated to do so. The criminal charges against Agility alleged that it concealed consolidation fees that it should have paid and that this caused an inflated price to be paid by the United States. Starting in 2006, Agility filed a number of claims seeking additional payments in the amount of $249 million alleging that DLA owed this money for its performance under a series of military contracts. The agreement reached last month requires Agility to release all claims to this $249 million.

another Kuwaiti The allegations that are the basis of this agreement arose from a civil lawsuit that was filed against Agility and company – The Sultan Center Food Products Company, K.S.C. (TS) – by Kamal Mustafa Al-Sultan, a former vendor of Agility. Al-Sultan filed his suit under the whistleblower provisions of the False Claims Act. These provisions permit individuals to sue on behalf of the government and to share in any recovery. Mr. Al-Sultan is scheduled to receive $38.85 million as a result of the civil action he filed. If you have chosen to report a False Claims Act violation we advise you to contact a qui tam law firm. Qui tam law firms will be able to put you into contact with an attorney who will be able to advise you on such matters. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).


The Government Intervenes in False Claims Act Lawsuit against the City of Los Angeles and CRA/LA

Whistleblowing often contributes to the process of uncovering waste, fraud, and abuse by aiding some of society’s most disadvantaged members. Proof of this was demonstrated last week when the Justice Department announced that it was intervening in a lawsuit against the City of Los Angeles and the CRA/LA (formerly the Community Redevelopment Agency of the City of Los Angeles). The suit alleges that CRA/La and the City of Los Angeles falsely certified that they were in compliance with HUD’s accessibility laws specifically Section 504 of the Rehabilitation Act. This act is meant to ensure that disabled individuals have equal access to public housing.

According to the lawsuit CRA/LA and the City of Los Angeles applied for and received millions of dollars from HUD and that a portion of that money was meant to provide affordable housing for people with disabilities in compliance with HUD’s accessibility laws. The laws, in part, require that five percent of all units in federally-assisted multifamily housing be accessible to people with mobility impairments. They also require that the city and CRA/LA to maintain a list of accessibility features for those with any number of impairments including auditory and visual impairments. Finally, the law requires that a monitoring program be put in place to ensure that the disabled are not denied the benefits of federally-assisted housing programs.

As a precondition to receiving HUD funds, the City was required to comply with Section 504 of the Fair Housing Act. The lawsuit alleges that none of the HUD-assisted multifamily housing supported by CRA/LA met the minimum number of accessible units. The lawsuit also alleges the City and CRA/LA failed to monitor sub-recipients of HUD funds for compliance with accessibility laws. Finally the government alleges that the City and CRA/LA failed to maintain a publicly available list of accessible units and their features.

“This case alleges that the City of Los Angeles repeatedly violated the law by falsely certifying that millions of federal dollars were being used to build housing that included units accessible to people with disabilities,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “While people with disabilities struggled to find accessible housing, the city and its agents denied them equal access to housing while falsely certifying the availability of such housing to keep the dollars flowing. The conduct alleged in this case is very troubling because of the impact on people who did not have access to housing that met their needs.”

The lawsuit was filed in the U.S. District court in Los Angeles by Mei Ling, a resident of Los Angeles who is confined to a wheel chair, and the Fair Housing Council of San Fernando Valley. Mei Ling filed the lawsuit under the qui tam or whistleblower provisions of the False Claims Act. The Act permits individuals to sue on behalf of the federal government in cases where False Claims Act violations are thought to have occurred. The Act also allows whistleblowers to share in any recovery. If you have chosen to report a False Claims Act violation we advise you to contact a qui tam law firm. A qui tam attorney will be able to advise you on such matters and protect your rights. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).


Former Chief Operating Officer of Freedom Health to Pay $32.5 Million to Settle False Claims Act Allegations

As has been the case all too often, the government is again alleging that another health care provider has given more importance to monetary considerations than it has over medical necessity when it comes to patient care. Indeed, late last week, the Justice Department announced that former Chief Operating Officer (COO) of Freedom Health, Siddhartha Pagidipati, has agreed to pay $750,000 to resolve False Claims Act violations. Freedom Health – a Florida-based provider of managed care serves – has agreed to pay more than $31 million for its part in engaging in illegal schemes to maximize its payment from the government in connection with Medicare Advantage plans.

“When entering into agreements with managed care providers, the government requests information from those providers to ensure that patients are afforded the appropriate level of care,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Today’s result sends a clear message to the managed care industry that the United States will hold managed care plan providers responsible when they fail to provide truthful information.” The government alleged that Freedom Health submitted unsupported diagnosis codes to The Centers for Medicare & Medicaid Services (CMS) which resulted in inflated reimbursement rates related to two Medicare Advantage plans operating in Florida. Moreover, the government also alleged that Freedom Health misrepresented to CMS the scope of its network of providers in its application to the provider. These representations allegedly began to occur in 2008 and were later expanded in 2009 into new Florida counties and in other states.

“Medicare Advantage insurers must play by the rules and provide Medicare with accurate information about their provider networks and their patients’ health,” said Chief Counsel to the Inspector General Gregory Demske of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “OIG will investigate and hold managed care organizations accountable for fraud. Moving forward, the innovative CIA reduces the risks to patients and taxpayers by focusing on compliance issues unique to Medicare Advantage plans.” The original case that lead to these settlements was brought about by a lawsuit under the qui tam or whistleblower, provisions of the Federal False Claims Act and the Florida False Claims Act. The qui tam provisions of this Act permits private individuals to sue on behalf of the government in cases involving false claims and to share in any subsequent recovery. The whistleblower in this case is former Freedom Health employee Darren D. Sewell. His share of the settlement has not yet been determined.

Optimum HealthCare Inc., America’s 1st Choice Holdings of Florida LLC, Liberty Acquisition Group LLC, Health Management Services of USA LLC, Global TPA LLC, America’s 1st Choice Holdings of North Carolina LLC, America’s 1st Choice Holdings of South Carolina LLC, America’s 1st Choice Insurance Company of North Carolina Inc. and America’s 1st Choice Health Plans Inc., are all corporate entities of Freedom Health and as a result were a part of the settlement. If you have been accused of violating The False Claims Act it is advised that you contact a False Claims Act lawyer. A qui tam law firm will be able to advise you on such matters and protect your rights. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).


United States Joins in Second False Claims Act Lawsuit against United Health Group Inc

Often, alleged healthcare fraud involves the proliferation of false and inaccurate information about patient health records. These kinds of activities endanger patient health and illegally enrich health care providers who are involved in such fraud. This was what the Justice Department alleged when last week it announced that it had filed a complaint against UnitedHealth Group Inc. (UHG) for the second time in two weeks. The government is alleging that UHG knowingly obtained inflated risk adjustment payments based on untruthful information about the health status of beneficiaries enrolled in UHG’s Medicare Advantage Plans. In a related action involving false claims submitted to Medicare, the government filed a complaint earlier this month in United States ex rel. Swoben v. Secure Horizons. “The Department of Justice’s pursuit of this matter illustrates its firm commitment to ensure the integrity of the Medicare Program, including those parts of the program that rely on the services of Medicare Advantage Organizations,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

UHG is the nation’s largest Medicare Advantage Organization. It receives a monthly “risk adjustment” payment from Medicare for each enrolled beneficiary. These adjustments are primarily based on the health status of the beneficiary which is reflected in the diagnosis the patient receives from physicians. The complaint filed last week alleges that UHG knowingly ignored information about the medical conditions of beneficiaries and this in turn increased the risk adjustment payments Medicare gave to UHG. Specifically, the lawsuit maintains that UHG conducted a program designed to identify diagnoses not reported by physicians that would increase its risk adjustment payments. However, UHG allegedly ignored information in this program that showed that thousands of diagnoses provided to Medicare were invalid and thus did not support payments UHG received. Thus, UHG avoided repaying Medicare monies they owed the program by ignoring this information.

Moreover, the complaint alleges that UHG ignored information about invalid diagnoses based on financial incentives. Health care providers received payments from UHG connected to the amount of payments that UHG received from Medicare. UHG allegedly knew that its financial arrangement with certain health care providers created an incentive for these providers to report invalid diagnoses. This fact was confirmed by UHG’s review of these providers’ medical records. UHG is then said to have ignored evidence identifying invalid diagnoses from these providers and thus avoided repaying Medicare monies that neither it nor these providers were entitled. “To ensure that the program remains viable for all beneficiaries, the Justice Department remains tireless in its pursuit of Medicare fraud perpetrated by healthcare providers and insurers,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “The primary goal of publicly funded healthcare programs like Medicare is to provide high-quality medical services to those in need – not to line the pockets of participants willing to abuse the system.”

The lawsuit was filed by Benjamin Poehling, the former finance director for the UHG group. Poehling managed UHG’s Medicare Advantage Program and filed his lawsuit under the qui tam provisions of the False Claims Act. The qui tam provisions of the False Claims Act permit private parties to sue on behalf of the federal government and to then share in any subsequent recovery. The government intervened in this case as part of its ongoing effort to crack down on healthcare fraud. The False Claims Act is one tool that it uses to this end.

If you have chosen to disclose wrongdoing it is also advised that you contact a qui tam lawyer. A False claims act lawyer will be able to advise you on such matters and protect your rights. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).


Psychiatrist Convicted for his part in $158 Million Medicare Fraud Scheme

Sometimes convictions for violations of the False Claims Act can result in more than just corporate integrity agreements (CIA) and fines. They can sometimes result in prison terms for the accused. Case in point: Earlier this week, the Justice Department announced the conviction of a Houston-area psychiatrist for his role in a $158 million Medicare fraud scheme. The Justice Department worked with several agencies including the IRS and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU). Riaz Mazcuri, of Harris County Texas, was convicted of one count of conspiracy to commit health care fraud and five counts of health care fraud. Sentencing is to take place on Oct. 10, 2017 before a US District Judge in the Southern District of Texas. According to the government, from 2006 – 2012, Mazcuri and others defrauded Medicare by submitting false claims through Riverside General Hospital totaling $158 million. The claims submitted were for partial hospitalization program (PHP) services. (A PHP is a kind of intensive outpatient treatment for severe mental illness.)

The evidence presented at trial showed that Mazcuri participated in a scheme whereby Riverside paid bribes and kickbacks to group home owners and nursing home employees in exchange for sending Medicare patients to Riverside’s PHPs. Moreover, evidence showed that Mazcuri admitted and readmitted patients suffering from intense dementia and other mental illnesses into intensive psychiatric programs for years. Many of these patients did not qualify for the services that were purportedly provided at the PHPs. Mazcuri signed documents that allowed Riverside to bill Medicare $55 million of the $158 million that it billed Medicare for fraudulent psychiatric services.

To date, 15 others have been convicted for their participation in this scheme. Of those who have been convicted are Earnest Gibson III, the former president of Riverside and the operator of one of Riverside’s PHP satellite locations. The sentences of the convicted conspirators range from 5 to 45 years in prison. The case is being prosecuted by the Fraud Section of the U.S. Attorney’s Office for the Southern District of Texas. The investigation was conducted by several agencies including the FBI, HHS-OIG, IRS-CI RRB-OIG and the MFCU. Since its inception in March 2007, the Medicare Fraud Strike Force has charged nearly 3,000 defendants who have collectively billed the Medicare program for more than $11 billion. If you have been accused of violating The False Claims Act it is advised that you contact a qui tam Medicare lawyer. Qui tam law firms will be able to advise you on such matters and protect your rights. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).


Prosecutor Not Allowed to Intervene in Lawsuit against Sprint

Joining a suit as a whistleblower is not always cut and dry. This was proven to be the case when earlier this month, The Ninth Circuit court in San Francisco ruled that a prosecutor, who had accused Sprint of cheating the United States out of millions of dollars in surveillance services, would not be able to intervene in the government’s lawsuit against the telecom. A three-judge appeals panel ruled that the prosecutor, John Christopher Prather, did not have a “significantly protectable interest” in the government’s False Claim Act suit against Sprint. The court also ruled that Prather was not entitled to a share of the settlement simply because he had filed a qui tam lawsuit in 2009. U.S. Circuit Judge Marsha Berzon wrote for the court in a 20-page opinion that Prather could not, “…obtain a monetary bounty under the FCA on his jurisdictionally barred claims…by joining a related FCA action brought by the government after the dismissal of his qui tam action.”

Prather maintains that while working for the New York Attorney General’s Organized Crime Taskforce and the Metropolitan Transportation Authority of the Inspector General in the 2000s he noticed the cost of government wiretapping rising greatly. Prather stated that the labor cost of bugging cell phones should have been less expensive than bugging landline phones. Prather maintained that the FBI and the Justice Department was charged 10 times what they should have been. Prather says he grew suspicious of these rising costs and decided to file a whistleblower suit in 2009 under the FCA against Sprint, AT&T, Verizon and two other phone companies. The government did not intervene in the case at the time. U.S. District Judge Charles Breyer dismissed the suit in 2013 because Prather wasn’t the original source of the fraud allegations. Sprint eventually agreed to pay $15 million to settle the case.

The Ninth Circuit ruling was based on in part by The Supreme Court’s 2007 decision in Rockwell International Corp. v. United States. The court ruled in that case that government intervention could not supersede a plaintiff’s failure to qualify as the originator of the FCA suit. If you have chosen to disclose wrongdoing it is also advised that you contact a qui tam law firm. Attorneys who work for qui tam law firms can advise you on such matters and will work to protect your rights under the law.


Two Missouri Hospitals Agree to Pay $34 Million to Settle Alleged False Claims Act Violations

Part of the government’s effort at cracking down on health care fraud involves ensuring that healthcare providers remain motivated by medical necessity when it comes to treating patients and not by profit. This idea was demonstrated this week when The Department of Justice announced that Two Southwest Missouri health care providers had agreed to pay $34 million to resolve allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians. The defendants are Mercy Hospital Springfield f/k/a St. John’s Regional Health Center and its affiliate, Mercy Clinic Springfield Communities. The defendants operate a hospital, clinic and infusion center.

The settlement resolves allegations that the health care providers submitted false claims to the Medicare Program for chemotherapy services rendered to patients referred by oncologists. The formula used in referring patients to these oncologists improperly took into account the value of their referrals to the infusion center operated by the institutions. Federal law limits the financial relationship that hospitals may have with doctors who refer patients to them. “When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

The allegations arose from a lawsuit filed by a whistleblower, Dr. Viran Roger Holden, a physician who was employed by one of the defendants. Dr. Holden’s lawsuit was filed based on the qui tam provisions of the False Claims Act. Under these provisions, private citizens can sue on behalf of the government for false claims and share in any subsequent recovery. Dr. Holden is scheduled to receive $5,440,000 as his share of the settlement. “When physician compensation improperly accounts for referrals, patients are left to wonder whether their doctor’s judgment has been tainted and motivated by financial interests,” said Special Agent in Charge Steven Hanson for the Department of Health and Human Services Office of the Inspector General. “Illegal financial reward has no place in health care. Today’s settlement should send a message that, together with our law enforcement partners, we will pursue these cases.”

The government’s intervention in this complaint illustrates its emphasis on combating health care fraud which goes back to the previous administration. The False Claims Act is one powerful tool it uses to prosecute offenders. Tips from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477). If you have chosen to disclose wrongdoing it is also advised that you contact a whistleblower law firm. Whistleblower Medicare attorneys can advise you on such matters and will work to protect your rights under the law.


Indiana University Health and HealthNet Agree to $18 Million Settlement to Resolve Alleged False Claims Act Violations

Alleged violations of the Anti-Kickback Statute is a common theme among companies that are accused of governmental fraud. This fact was born out last month when Indiana University Health Inc. (IU Health) and Health Net, Inc. agreed to pay $18 million to resolve allegations that they violated state and federal false claims laws by engaging in an illegal kickback scheme related to the referral of IU Health’s OB/GYN patients to IU Health’s Methodist Hospital. Under the settlement agreement, IU Health and Health Net, Inc. agreed to pay $5.1 million to the United States and $3.9 million to the State of Indiana. “The payment of illegal remuneration to induce patient referrals interferes with health care providers’ independent judgment when they make referral decisions for their patients,” said Deputy Assistant Attorney General Joyce R. Branda for the Civil Division. “We will continue to pursue health care providers that engage in such conduct, which undermines public confidence in our health care system.”

 

The Anti-Kickback Statute (42 U.S.C. § 1320a-7b.) prohibits the knowing and willful payment of any remuneration to induce the referral of services or items that are paid by a federal health care program such as Medicaid, Medicare, TRICARE etc. Claims that violate the Anti-Kickback Statue are also false claims under the False Claims Act. The government alleged that from May 2013 through August 2016, IU Health provided HealthNet with an interest-free line of credit exceeding $10 million. The US further alleged that HealthNet was not expected to repay a large portion of this loan based on a financial arrangement between the two meant to induce HealthNet to refer its patients to IU Health’s Methodist Hospital.

 

“Helping to return millions of dollars in taxpayer funds to federal healthcare programs and the Indiana Medicaid program is critically important to me and my office,” said U.S. Attorney Joshua Minkler for the Southern District of Indiana. “Waste, fraud, and abuse can never be tolerated and tear at the fabric of first-class healthcare in this country.” The settlement came about as the result of a lawsuit that was filed by Dr. Judith Robinson, who formerly held a number of positions at both Methodist Hospital and HealthNet. Dr. Robinson filed her lawsuit in federal court in Indianapolis under the qui tam provisions of the False Claims Act. The qui tam provisions permit private individuals to bring a lawsuit on behalf of the government and to share in any subsequent recovery. Dr. Robinson is scheduled to receive approximately $2.8 million out of the federal share of the recovery. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477). If you have chosen to disclose wrongdoing it is also advised that you contact a qui tam attorney. A qui tam lawyer can advise you on such matters and will work to protect your rights under the law.