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Whistleblower to receive over $5 million in False Claims Act case

When someone blows the whistle on fraud, waste or abuse in federal programs, they can often receive as a reward a substantial portion of any money recovered on behalf of the government. This is called the qui tam provision of the federal False Claims Act. In a recent pair of consolidated False Claims Act cases, the whistleblower will receive a reward of $5,411,521.

The case involved the Kalispell Regional Healthcare System (KRH) in Montana and related entities (the KRH entities). The organizations have agreed to pay $24 million to resolve alleged violations of the False Claims Act, the Stark Law and the Anti-Kickback Statute.

The False Claims Act prohibits many forms of fraud and self-dealing in government programs, including Medicare and Medicaid. It also applies when violations of the Stark Law or the Anti-Kickback Statute result in false claims against government healthcare programs.

The Anti-Kickback statute prohibits offering, soliciting, paying or receiving any type of remuneration meant to induce referrals of items and services covered by federally funded health programs. The Stark Law, in turn, prohibits hospitals from billing Medicare for services that were referred by doctors with whom the hospital has improper compensation arrangements. These prohibitions are meant to ensure that a doctor's medical judgments are made in the patient's best interest and are not compromised by improper financial incentives.

According to the Justice Department, the KRH entities violated these laws between 2010 and 2018. They allegedly violated the Stark Law by paying full-time compensation at far above market rates to over 60 physician specialists, many of whom only worked part-time. Several of the entities were accused of violating the Anti-Kickback Statute by paying excessive compensation to doctors employed by other KRH entities in an effort to secure referrals and by offering administrative services at below-market rates in order to increase the profits of physician investors at one KRH entity called Flathead Physicians Group, and also to secure referrals to another KRH entity, HealthCenter Northwest.

"Quality healthcare is a critical need of all Montanans, but paying extra to physicians to induce referrals improperly raises the cost of that healthcare and must stop," said the U.S. Attorney for the District of Montana. "I would like to thank the team that worked hard to bring this to a quick and successful resolution, which is the largest False Claims Act recovery in the District of Montana," he added.

Contracts to provide government funded healthcare services are often in the news for fraud and abuse. If you work in the healthcare field, you may be in a position to blow the whistle. Protect your rights by discussing your situation with a lawyer familiar with False Claims Act litigation.

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