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Whistleblower to get $2,345,670 in medical kickbacks case

It has been reported that Post Acute Medical, LLC, and certain affiliates ("PAM") have agreed to pay $13,168,000 to settle claims by the Justice Department, Texas and Louisiana that they violated the False Claims Act and parallel state statutes. The nationwide operator of rehabilitation and long-term care hospitals was accused of knowingly submitting claims to Medicare and Medicaid that were the result of violations of the Physician Self-Referral Law and the Anti-Kickback Statute.

PAM was founded in 2006 and immediately entered into numerous physician services contracts, ostensibly in order to retain doctors in administrative or medical roles at its facilities. According to the Justice Department, those contracts were actually created in order to induce the doctors to refer patients to PAM facilities. If true, this would violate the Physician Self-Referral Law.

PAM also entered into "reciprocal referral relationships" with other healthcare companies. These arrangements involved PAM referring patients to those providers in exchange for reciprocal referrals, which also violated the self-referral law.

These actions also violated the Anti-Kickback Statute (often called the Stark Law), which prohibits offering, paying, or receiving anything of value to encourage the referral of items or services to federally funded programs like Medicare and Medicaid. Hospitals are prohibited from billing federal programs for services referred by doctors with whom they have improper financial relationships. Doing so violates the federal False Claims Act and state equivalents.

"Kickbacks undermine the independence of physician and patient decision-making, and raise healthcare costs," explained the head of the Justice Department's Civil Division.

"Medicare and Medicaid beneficiaries depend on their healthcare providers to make decisions based on sound medical judgment," said a U.S. Attorney involved in the case. "Our office will take decisive action to address allegations that medical providers are paying or receiving improper financial benefits that could influence medical decision-making."

In addition to the payment of more than $13 million, the settlement requires PAM to enter into a five-year corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General. This requirement includes compliance obligations and an independent review.

The case against PAM was originally brought as a False Claims Act lawsuit by a whistleblower. The government intervened in the case, but that does not affect the whistleblower's right to receive a substantial portion of the overall recovery as a reward for blowing the whistle. The whistleblower in this case will receive $2,345,670.

If your healthcare, defense or other organization contracts with the government, you may be in a position to uncover fraud, waste or illegality. Before you blow the whistle, contact an attorney who knows how to protect your rights and ensure you receive any reward you are due.

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