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Self-referrals, lack of documentation lead to $14.7 million case

It was recently reported, that, after four different employees blew the whistle on false and inflated claims to Medicare and Medicaid, two healthcare concerns have admitted responsibility and agreed to pay a $14.7 million settlement. One was Health Quest Systems, Inc., a New York-based family of hospitals and healthcare providers delivering medical, surgical and home healthcare services. The other was Putnam Health Center (PHC), a Health Quest subsidiary based in Carmel Hamlet, New York.

One of the whistleblowers will receive $1,893,092 as a reward. Another will receive at least $875,546, and the other two will share in a reward of $56,266. The four whistleblowers filed three False Claims Act lawsuits which the government later joined. When such lawsuits are successful, the private citizens who initiated them can receive a substantial percentage of the overall recovery.

As part of the settlement, Health Quest and PHC acknowledged, admitted and accepted responsibility for the submission of improper claims to federal healthcare programs:

Between April 1, 2009, and June 23, 2015, Health Quest billed certain services at two levels higher than was supported by the medical record

Between April 1, 2011, and August 2014, Health Quest billed for home health services that included face-to-face treatment by a physician but failed to document that treatment in support of the claim

Between March 1, 2014, and December 31, 2014, PHC submitted apparently false claims for both inpatient and outpatient services that were provided by orthopedic physicians who had a direct relationship with and received compensation from PHC. This allegedly improper compensation agreement violated the Physician Self-Referral Law. Furthermore, the government alleged that the physicians were paid at a rate exceeding the fair market value of the services, and that this was done in violation of the Anti-Kickback Statute.

"Government health program dollars are precious and need to be carefully guarded," said a spokesperson for the Department of Health and Human Services OIG. "Working closely with our law enforcement partners, we will fight for the integrity of these taxpayer-funded programs."

In addition to paying the $14.7 million, Health Quest has agreed to enter into a corporate integrity agreement with the Health and Human Services OIG. It will also pay an additional $895,427 to the State of New York, which is a joint funder of the state's Medicaid program.

As we mentioned, the False Claims Act allows private citizens to share in any financial recovery when they blow the whistle on fraud, waste or abuse in government programs. These whistleblowers may work in healthcare, military contracting, or any area involving government contracting.

If you are considering blowing the whistle, protect yourself and your potential recovery. Talk to a lawyer familiar with whistleblower law before taking any concrete steps.

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