In a landmark case, California Skilled Nursing Facilities, along with the owner and management company, have agreed to a groundbreaking $45.6 million consent judgment to settle allegations of kickbacks to referring physicians. The settlement is in response to claims that the facilities submitted false claims to Medicare by providing unlawful inducements to physicians in exchange for patient referrals. This violation of the Anti-Kickback Statute undermines the integrity of the healthcare system and compromises the best interests of patients. The settlement and resulting consent judgment serve as a stern warning that the U.S. Department of Justice will not tolerate illegal financial relationships that jeopardize the integrity of federally funded healthcare programs.
Summary of the Case
The owner and management company of several skilled nursing facilities in California, along with the facilities themselves, have agreed to a $45.6 million consent judgment to settle allegations of kickbacks to referring physicians. The allegations involved the submission of false claims to Medicare and the payment of kickbacks to induce physicians to refer patients to the facilities. The settlement reflects the seriousness of the violation and sends a message that financial incentives should not compromise medical decision-making and patient care.
The Anti-Kickback Statute prohibits offering or paying remuneration to induce the referral of items or services covered by Medicare, Medicaid, and other federally funded health care programs. The statute aims to ensure that medical decision-making is based on the best interests of patients and not influenced by improper financial incentives to providers. In this case, the owner and management company of the skilled nursing facilities allegedly entered into medical directorship agreements with physicians that served as vehicles for the payment of kickbacks. The payments were made in proportion to the number of expected patient referrals, and physicians who did not refer enough patients were terminated.
Alleged Violation of Anti-Kickback Statute
The allegations in this case involve the violation of the Anti-Kickback Statute through the payment of kickbacks to physicians. The owner and management company of the skilled nursing facilities allegedly used medical directorship agreements to disguise these kickbacks as compensation for administrative services. In reality, the purpose of these agreements was to induce physicians to refer patients to the facilities. The actions taken by the defendants undermined the integrity of federal health care programs and compromised the independence of physician decision-making.
Details of the Kickback Scheme
The kickback scheme involved the systematic payment of kickbacks to physicians in exchange for patient referrals to the skilled nursing facilities. Physicians were hired based on their promise to refer a large number of patients and were paid in proportion to the number of expected referrals. The scheme also involved the termination of physicians who did not meet the expected referral quota. This scheme allowed the owner and management company of the facilities to ensure a consistent flow of patients, thereby increasing their revenue.
Quotes from Official Statements
“Kickbacks can impair the independence of physician decision-making and waste taxpayer dollars.” – Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division.
“The administrators and beneficiaries of the Medicare Program expect that providers will make decisions based on sound medical judgment, not their personal self-interest.” – United States Attorney Martin Estrada.
Settlement and Consent Judgment Details
As part of the settlement, the owner and management company of the skilled nursing facilities, along with the facilities themselves, have agreed to a $45.6 million consent judgment. This settlement reflects the seriousness of the allegations and serves as a financial consequence for the violation of the Anti-Kickback Statute. The defendants will also make scheduled payments to the United States of at least $385,000 over the next five years. The payment schedule was negotiated based on the defendants’ ability to pay. The settlement resolves the False Claims Act liability of the defendants.
Whistleblower Complaint and False Claims Act
The settlement in this case stems from a whistleblower complaint filed in 2015 by the former Vice President of Operations and Chief Operating Officer of the management company. The complaint was filed under the qui tam provisions of the False Claims Act, which allows private individuals to bring a lawsuit on behalf of the government and share in the proceeds of the suit. The government intervened in the case and took over some of the allegations made by the whistleblower. The False Claims Act is a powerful tool in combating health care fraud and allows individuals to hold wrongdoers accountable.
Corporate Integrity Agreement
In addition to the settlement, the owner and management company of the skilled nursing facilities have entered into a five-year corporate integrity agreement with the Department of Health and Human Services Office of the Inspector General (HHS-OIG). This agreement requires the defendants to comply with various obligations, including an Independent Review Organization’s review of their physician relationships. The corporate integrity agreement serves as a measure to prevent future violations and ensure compliance with federal health care program requirements.
Government’s Focus on Combating Health Care Fraud
The settlement and intervention by the government in this case highlight the government’s emphasis on combating health care fraud. The False Claims Act, along with other tools and resources, plays a significant role in this effort. The Department of Justice and the HHS-OIG work together to investigate and take action against individuals and entities engaged in fraudulent activities. The government’s commitment to preventing illegal financial relationships and protecting the integrity of federal health care programs is evident in its handling of this case.
Archives and Contact Details
For more information on this case, individuals can refer to the archives of the U.S. Attorney’s Office for the Central District of California. The office’s contact information is as follows:
Central District of California 312 North Spring Street Suite 1200 Los Angeles, California 90012 Phone: 213-894-2400 Fax: 213-894-0141
Additional information and resources on reporting potential fraud, waste, abuse, and mismanagement can be found on the Department of Health and Human Services’ website. Tips and complaints can be reported to HHS at 800 HHS TIPS (800-447-8477).
This comprehensive article provides a detailed overview of the case involving California skilled nursing facilities and their violation of the Anti-Kickback Statute. It outlines the background information, details of the kickback scheme, settlement and consent judgment, whistleblower complaint, corporate integrity agreement, and the government’s focus on combating health care fraud. The article emphasizes the importance of upholding the integrity of federal health care programs and ensuring that medical decision-making is based on the best interests of patients.