Hospital Kickbacks Basis of Settled False Claims Lawsuits

In recent qui tam law news, more health care providers have agreed to return moneys and pay fines for allegedly inappropriately billing Uncle Sam. U.S. taxpayers have the brave employees who blew the whistle and filed qui tam lawsuits against their employers to thank for reporting this corporate misconduct. In previous Tennessee Qui Tam Law Blogs, we have covered pharmaceutical companies that fraudulently bill government health care programs and medical institutions charging Medicare for unnecessary medications.

In one lawsuit initiated by whistleblower employees settled earlier this week, kickbacks using Medicare and Medicaid moneys were alleged by federal prosecutors in the False Claims lawsuit. Christiana Care Health System agreed to pay the United States and Delaware a combined $3.3M to resolve allegations of paying kickbacks to a Delaware neurology firm. In another qui tam lawsuit, a $14M settlement was reached between Feds and two Atlanta-based nursing home chains accused of kicking patients over to a Kentucky-based pharmaceutical firm.

Two neurologists blew the False Claims Act whistle on kickbacks paid with government money as part of a qui tam lawsuit against Christiana Care. According to the lawsuit, Medicare and Medicaid federal moneys were billed by the state’s largest health care provider who would file claims to these government programs and then pay neurologists at independent firms significantly more to interpret electroencephalograms (EEGs). In some instances, the neurology firms would be paid over two-times the reported billing costs. In return, according to the False Claims lawsuit, neurologists would feel obligation to refer patients to Christiana Care.

Federal prosecutors considered this improper financial relationship reported by whistleblowers was worthy of action. Christiana Care admitted no wrong and agreed to settle out of court. Unlike other fraudulent medical billing qui tam cases, this case against Christiana Care was unique in that the services were provided and medically necessary. Rather, allegations in this settled whistleblower lawsuit suggest a violation of the Stark Statute, a federal law preventing physicians from referring a patient to medical facilities for which they have a financial interest.

In continuing nursing home qui tam news, two nursing home chains based in Atlanta, GA agreed to a $14 million settlement after standing accused of an alleged $50 million kickback scheme with Kentucky-based pharmaceutical firm Omnicare. This is part of the fall-out from a court decision concerning Omnicare’s kickbacks reported in this Tennessee Law Blog.

In a qui tam lawsuit, a third party whistleblower with special knowledge initiates the lawsuit with a qui tam attorney and shares in a significant portion of the federal moneys recovered as well as a portion of the penalties imposed. Thus, the whistleblower (called a “relator” in False Claims Act cases) receives a financial incentive for reporting fraud of government moneys.